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Question about Lease w/ Option to Purchase?
We are going to lease for six months. If we like the house we can enter into a lease w/ option to purchase. I read on a website that with certain paperwork, when the time comes to get a mortgage, you can refinance it instead. Has anyone heard of this? Does it have to do with how much money has accumalated towards the principal? Is there a website with more info on this? Thanks I am just looking at all our options.
Public Comments
- just look it up online or better you take to a real estate agent for advice
- How can you refinance something that you don't own? With a lease w/option contract, you basically have a regular rental agreement, with part of your monthly rent going towards the purchase price of the home. Then, when the lease is up, you have the option to purchase the home for the agreed upon amount, minus the money that has accumulated during the rental period from your larger monthly payments. If you fail to get a mortgage at that time, the home owner can usually keep any money you have paid towards the house. You technically have to have a mortgage to refinance a mortgage. If you don't own the property, how could you re-fi? That just doesn't make any sense to me. Whenever you go into an agreement like this, you have (I believe) either 4 or 5 days to have your attorney review the paperwork. Make sure your lawyer looks at anything before you sign it.
- Not sure where you heard that from. You CANNOT refinance on a home that didn't have a mortgage on it to start with. You have to buy it like anyone else.
- No,you cannot refi. The way this works is usually for a tenant that needs time to bring their credit up so they can finance the property with a mortgage. When you do a lease option the tenant usually puts down an option fee which is non-refundable,but if you exercise your option it along with monthly credits will be your down payment,if you do not exercise your option you loose it all as it is non-refundable. If you do a lease/option file a memorandum at the county clerks office to show you have an option to purchase so it will put a cloud on the title and show that you are building an history of on time payments with the landlord,also make copies of each rental check. The mortgage lenders like to see this and it helps when you apply for your mortgage.
