Lease to Own (also known as 'Lease Purchase' or 'Rent to Own')
A Lease to Own home purchase is a lease combined with an option to purchase the property within a specified period, usually 3 years or less, at an agreed-upon price. This alternative to renting is a great way for a family or individual to start the home purchase process now and enjoy the benefits of home ownership, while having a plan for the future that enables a conventional home purchase.
Reasons to use the Lease to Own program:
- Need to update or repair credit
- Do not have the full initial down payment or investment
- Need to reduce debts
- Have a home to sell
- Tired of renting and paying off someone elses debt
- Transferred into an area and want to provide for your family
- Do not want to live around transient renters
- Want to establish relationships with your neighbors
- Want to start personalizing and customizing your living area now
Price ranges:
- The most common price ranges for Lease to Owns are $115,000 to $230,000
- Lease purchases are available up to $700,000 plus
How it works:
- You will sign a lease with an option to purchase on a home for an approximate timeframe of 12 to 36 months, depending on your personal situation. In the meantime, you will be able to tell your friends and family that you have purchased a new home for you and your family!
- You need to have an initial minimum down payment (option deposit) of $2,500.00, sometimes more depending on the purchase price of the home. If you are unable to acquire the initial down payment required, it is possible that your monthly payment may be increased to include a monthly amount that goes towards building your down payment needed.
- Similar to the process a person would go through when applying for a mortgage, we need to determine the payment you can qualify for on a mortgage on a monthly basis.
- Rules of thumb are approximately 2.5 times your gross verifiable annual compensation or a payment of approximately 33% of your gross monthly income. An example of this is if you earn approximately $3000 a month, you can afford approximately a $1000 monthly home payment.
- If you combine your monthly housing payment and your current debts, such as car payments, credit cards, student loans, etc, your new combined debt should not be over 43% of your Monthly gross income; for the previous example, it should not exceed $1290.00 of total combined monthly debt.
- Current debt has a lot to do with how much you can qualify for; the advantage of the lease to own program is that we are working on a plan for the future and can tailor fit a plan to meet several different obstacles and/or needs.
- In order to verify the requirements of a Lease to Own, you need to meet with one of our preferred Mortgage Originators that will review your credit and your income. After review, it will be determined if you need to enroll in a credit restoration or debt consolidation program, or if you need to create a down payment savings plan to save the minimum 3% down payment you will need to exercise the option to purchase. In some cases, you may need help with both.
- If you are enrolled in credit restoration, your credit will be monitored and established (by following the guidelines presented) during your lease purchase contract.
- At the end of your lease purchase contract, you will engage in your option to purchase and obtain a traditional mortgage. Any monthly deposit savings combined with your initial investment and/or down payment will be applied towards the down payment on your mortgage.
Ultimately, our goal is to help each and every individual that needs a place to call home, and work together with them to 'custom fit' a plan that will help them establish whatever current or future goal they may be trying to achieve. The many benefits of a lease to own program, as outlined above, will enable many past, current, and future homeowners to achieve their housing needs, whatever they may be.
