Before you sign a lease purchase agreement, it is important that you understand what you are doing. Many people get into these types of transactions, and are unaware of the implications of the contracts that they sign.
With a lease purchase contract, you are agreeing to lease the home for a pre-determined period of time. At the end of this term you are legally required to purchase the home. This means that if anything happens that prevents you from purchasing the home, you may be sued for specific performance.
For this reason, you need to make sure that you really do want to eventually own the home. Be sure about the house itself, as well as the area and neighborhood it is in. You also need to do some research on the value of the home to make sure that the purchase price is fair. While you should not expect to be able to take advantage of market and get the home at a discount, you should get the home for fair market value. Getting an appraisal is always a good idea. At the very least, get the opinion of a real estate professional that you trust.
You should also seek the advice of a mortgage broker that specializes in working with clients who have bad credit. Ask them what you need to do to qualify, and what a reasonable time frame is. (And make sure your contract gives you enough time.) They may also be able to steer you in the direction of the best credit repair companies out there.
Once you know what you need to do, it is important that you get to work right away. Repairing credit takes time! You may also need to work on debt reduction and creating good new credit. Pay attention to these things right when you move into the home, and don’t put it off until a few months before you need to qualify for a mortgage. If you do, you may find that you are unable to get a mortgage when the time comes.
A lease purchase agreement can be the ticket to home ownership that many families dream. But you need to do your due diligence and plan ahead so that when your reach the end of the lease contract your are prepared and able to buy the house you have been leasing. This means getting your credit, down payment and financing in order well ahead of that date so that your transition from renter to home owner will be as seamless as possible.
You must log in to post a comment.