Considerations for a Lease-Option in Antelope
How do you decide if now is a good time to do Lease-Option in Antelope? Well, a good first step is to look at how Lease-Option transactions (sometimes called Rent-to-Own deals) work, and then decide if you are going to feel comfortable with all the moving parts. For those who are willing to do almost anything to get into a house that they can call their own, a Lease-Option might get you there. But, make sure you you understand all the steps involved and have a plan to meet the transaction milestones, before you turn money over to anyone.
Lease-Options – Buyer Benefits
While there are lots of things to consider if you are looking at a Lease-Option in Antelope, you do get the benefit of getting into a home with a clear path to ownership. Further, most Lease-Option agreements spell out what the purchase price will be when you exercise the option to purchase. So, as a Lease-Option purchaser, you get to begin to feel the pride of home ownership and you know exactly what price you will be paying at a date in the future.
Most times, a portion of the monthly payment on a Lease-Option contract is credited towards the purchase price and comes back to the buyer in the form of a credit towards your down payment. So, the buyer pays a bit over fair market rent every month and builds up a credit in a “savings” account that helps the buyer build up a down payment. To be sure you get this benefit when it comes time to exercise your option, begin working with a mortgage professional who can help you structure the Lease-Option in a mortgage friendly way.
Lease-Options – Buyer Risks
The Lease-Option, by it’s nature, is not a quick transaction. Lease-Options take time because they normally require the buyer to make changes to their financial situation – improve credit scores, save down payment money and get employment (read income) squared away so the buyer can get a loan. There is always the risk that a buyer can’t get their situation repaired to the point that they can qualify for a loan, and if that happens the money the buyer has paid towards the option – the upfront option fee and the rent overage – could be lost. So, it’s important for a Lease-Option buyer to have a solid plan to reach their financial milestones in time to exercise the option to purchase.
Another risk associated with Lease-Options is tied to changes in the market. As we have discovered in Antelope over the past several years, real estate prices don’t always go in an upward direction. Interest rate changes have to be considered, as well. So, if home values move down you may choose not to overpay for the property, and if interest rates move up, the payment to purchase the property may rise beyond your ability to pay.