Houston Texas Rent To Own Homes

Rent to own Home also called Lease To Own is a means of acquiring ownership over time without taking on debt (mortgage).
 

When you rent to own a home part of the rental can go towards the down payment. This is a good way to get into a home while avoiding the expenses of owning a home.

A Houston Texas lease-to-own home purchase (also rent-to-own purchase or lease 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.

You pay an option fee, 1% to 5% of the price, which is credited to the purchase price. The borrower pays rent, and an additional rent premium that is also credited to the purchase price. If the purchase option is not exercised, the buyer loses both the option fee and the rent premium.

Should You Pursue Rent To Own Home in Houston To Purchase A Home?

By: Raynor James

The real estate market is a place where people can get very creative. This brings us to the rent with option to buy programs you see on the market.

Leasing is a fairly popular form of living arrangement since it basically involves renting over a pre-set period of time, usually 3, 6, or 12 months at a time. Leases provide lower rates than a month by month rent. However, when looking to lease, one will often come across the "Lease Option."

A lease option is essentially the same thing as a lease except that it provides the option to purchase the property at a future date.

The option is just that, an option. It may be an interesting offer for some Houston home renters, but others will want to pass it up. The option does not have to be taken, since there is a fee required to purchase the option. Although the amount can vary, the fee is usually up-front and paid when entering the lease. In general, lease options are offered in times of slow real estate markets, since generally owners of property look to simply sell during the hot times.

There are some definite advantages and disadvantages when it comes to a home lease option. On the downside, the lease option is rarely exercised and therefore it ends up being money wasted. Many people pay the money thinking they will buy later and then either lose interest or find they can't qualify for a mortgage. When this happens, the money paid to purchase the option is lost and you will be wondering what you could have possible been thinking when you entered into the agreement.

An area where a lease option is commonly used is real estate investment. In such a situation, a real estate investor believes he or she can flip the home in a short period for a profit. They find the lease option to be very attractive because it allows them to secure the home without dedicating significant cash resources to the deal. Once they purchase the option, they then start hunting for a buyer that will pay more than the seller is looking for in the original sale. If the investor can pull it off, they exercise the right to buy and immediately sell to the third party. In many cases, the two transactions will happen at the same time! This leaves the investor with a smile on their face and the original seller in a grumpy mood.

As with anything, there are upsides and downsides to a lease option. For investors, it makes sense in many situations since it frees up cash flow. For people looking for a place to live and raise a family, it rarely makes sense.

About the Author:

Raynor James is with http://www.fsboamerica.org - fsbo homes for sale by owner.