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How does a Lease w/option to but work?
We are currently looking for a home, but we lost our home to foreclosure and are filing bankruptcy.We are considering a lease with option to buy, because we need time to clean our credit up but don't want to move our children again. Are we going to run into problems since we will have a bankruptcy on our credit? And do you have to have alot of money down? So, if anyone can help how does this work?
Public Comments
- Be careful the person you lease from could have the house foreclosed too and leave you with nothing. The main reason people lease to own is to lock in a price and you pay with higher rent. Most can't buy when the lease is up because they haven't saved enough money or cleaned up credit or other reason. This the landlord gets to keep any extra rent you would have paid all those years. Kids don't mind moving much if it is in the same school and walking distance to friends so you can just wait 3-4 years and start shopping for what you can afford then.
- A lease with an option to buy can work any way the seller wants it to work basically. There are a couple of ways it could go and that I know of. 1. One year option with no discount for renting but the selling price stays as it is NOW. 2. One - two year option with a % of your rent going toward the down-payment and/or sale price of the home. Usually the seller makes it convenient for him/herself. It's also possible you may have a seller that will hold the note for you but in today's market that is rare unless you have a huge down payment. It would depend on the interest rate and points. Your bankruptcy will take at least 10 years to "clean up" and not show on a credit report. Good luck!
- Your in trouble........
- call up fsbo sellers and offer them a L2P agreement ( you can web search it up ) and pay just enough to cover the mortgage payment. You are in the drivers seat with all the homes for sale and owners in financial trouble. You would not even need any money to put down if the mortgage is current. I have been taking over every home i can in my area this way to use as rentals. The homeowner is glad to get out of it and i make a nice profit every month renting them out.
- I was once in your situation. Don't worry, everything will work out for you =) A year ago I found this organization that gives people up to $1500 in renter or mortagage assistance! They operate in most US cities, I highly suggest you try to get some of this money. http://www.rent-and-mortgage-help.org Good Luck!
