Ok …you’re looking to purchase a new home for your family, but your circumstance or at least the timing of the purchase is not ideal.
Maybe you have a property you need to sell in your previous location, a certificate of deposit you own doesn’t mature for another year or so, or some other circumstance that has your scheduling in a bind. Then learning a bit more about lease purchase options might be helpful in exploring your choices.
What is a Lease Purchase?
First it is important to make a distinction between Lease Option and Lease Purchase because they are two significantly different financial contracts.
A Lease Option is basically a ‘rental agreement’ for a specified length of time that also gives you an option to purchase the home at an agreed upon price. It in effect gives you a first right of refusal purchase option during your lease period. You do not have to actually close on the purchase, it’s an option.
A Lease Purchase on the other hand has at its heart a ‘purchase agreement’ with a provision that closing is to be ‘exercised’ at the agreed upon price at the conclusion of the lease period. Thus contractually you are obligated to close on the purchase, it is not optional.
Let’s Be Careful Out There
The Birmingham Homes linked to above, mention that a lease purchase option is available from the home owner. However given such a huge difference in a Lease Option and a Lease Purchase, we need to be careful when discussing these options and be sure to get the details of the option being offered, if not both.
This is one area where I strongly advise, that you utilize a buyers agent before approaching the home owner. If you would like to discuss this further, please understand you can contact me anytime and I would be happy to assist.