19 Oct 2011

Pros and Cons of a Lease Purchase

homeA lease purchase (AKA lease option, rent to own, lease to own, etc.) is a rental or lease AND a purchase agreement (combined or separated) between a tenant/buyer and a landlord/seller where the tenant/buyer has the choice, option or right to buy the property, or control certain terms of the agreement while the property is being rented.

It’s a great option for first-time home buyers who don’t have a down payment or established credit history, or investors looking to lock in a price. If you’re considering a lease purchase, consider the following:


Pros Cons
Try before you buy – get the home you really want Risk of losing money if you back out of the deal
Smaller down payment – time to save more significant down payment at time of purchase Unethical landowners may be quick to take possession if a payment is late
Home price locked in for a set period at the time of signing – good if property values increase Home price locked in for a set period at the time of signing – bad if property values decrease
Seller pays for maintenance while the buyer pays the lease. Seller also pays for property tax, insurance and repairs until buyer purchases the property. Seller retains mortgage interest tax deduction.
Allen Tate Companies
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