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real estate - lease purchase option texas?
I have been leasing my house and am now considering lease purchase option. I need a good web site with detailed info on how it works,with does and don'ts. Also does anyone know how much the real estate agent fees are for drawing up the paperwork,and who pays the fees,seller or buyer. Is contract for deed the same as lease purchase option. Are their property laws that pertain to these subjects
Public Comments
- A.D KESSLER
- A lease with an option to purchase is not a Contract for Deed. A Contract for Deed is a recorded document giving you limited title and the seller is your lender. You have some rights, title and interest in the property. A lease with Option to Purchase is an agreement to purchase a home after a specific time at a set price at the beginning of the lease. Typically what happens is that you agree on the final purchase price of the home when the lease is signed. You make monthly payments and a portion of that payment goes into a pot to be used for your downpayment. For instance, if typical rents in the area of the home are $1500 - you might pay $1800 and $300/mo goes toward the sales price of the home. At the end of the year you have a credit of $3600. Other lease options, if you put a downpayment at the beginning of the lease can be treated as a refinance by some non-corming lenders. For example, the house might be selling for $250,000. You give the seller/landlord $5000 (2% of the sales price). You make your monthly payment by check each and every month (do not pay cash, do not use cashiers checks or money orders) so the lender when you buy can verify that you have the ability to make the payments. Some lenders might be able to treat this transaction as a refinance since you have a fiduciary interest in the property. The biggest mistake I have seen is the seller letting you make improvements in lieu of making rent payments and the monthly payments fluctuate each month. No Matter how tempting, do not do this. If anything, work it out to make the monthly payment and then get re-imbursed for the work done - so your payments remain consistant. One more note that I just came across recently that is also a big mistake. I had someone call me that had a lease option and they made their $1700 payment every month. Then they found out that the owner of the property was not making his payment and he was in foreclosure and the Sheriff came knocking on the door. The contacted an attorney and the attorney recommended they stop making their payments. I had the possibility of refinancing the lease contract but now they had not made a payment in 3 months, therefore they had a 60 day late payment on their record. The better advise would have been to set aside the payment into an escrow account with the Attorney, or at their bank and show that they maintained the ability to make the payment while the mess of the foreclosure was being sorted out. They also did work in lieu of rent over the last few months. I could not help them as they did not have a good pay record to show a new lender. They just moved. By the way, you and the seller can draft a contract. A residential purchase agreement can be purchased on line or at many office supply stores.Purchase agreements are fill in the blank forms. However, if you feel uncomfortable with that you can hire a realtor and negotiate fees. One last note - are you doing the lease option due to known credit problems? If not, first go to a mortgage banker and see what your total situation is. If you can't get a mortgage now, what will it take to get one when the lease option expires.
