Is Lease-to-Own a Good Way to Buy a House?

NEW YORK (MainStreet) — Lease-to-own is something you do with furniture, not a house, right? Not necessarily. Although most people who buy houses do it the old-fashioned way, with a down payment and a mortgage, lease-to-own deals are also common in residential real estate.
Leasing to own attracts buyers who can handle a monthly payment but lack a down payment. It can also be good for people with bad or no credit, as well as people who want to give a particular house, school system and neighborhood a test drive without committing to a big down payment and 30-year mortgage. And if you believe local home values are headed up, it can be a low-risk way to lock in a price now before it gets more expensive.

 

Lease-to-own, also known as a lease option, requires thinking outside the box. But it can make homeownership a reality today for people who might otherwise be paying rent for years. If the owner is willing, renters may even be able to lease-to-own the place they're staying in now, as well as any other rental. "Every for-rent sign you see potentially can be a lease option situation," says Eric Lloyd, a real estate coach with Salt Lake City-based Professional Education Institute.

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