If you want a house and are considering whether you should buy or lease to own, your choice depends on your situation, credit history and desired level of responsibility.
If you want a house and are considering whether you should buy or lease to own, weigh the advantages and disadvantages of both options. Your choice will ultimately depend on your personal situation, credit history and desired level of responsibility.
Pros and cons to Leasing
A lease purchase is similar to a rent-to-own contract. You and the homeowner will create a contract that dictates the monthly payment, date and amount of the purchase and an upfront fee option, if included. The contract will also establish how much of your monthly lease payment goes toward the home purchase.
This type of home sale is ideal if you have poor credit or unestablished credit, could qualify for a home loan but don't have a down payment, or if you are just not ready to be a homeowner. At the end of the term, say three years, you can get financing to buy the home or walk away. If you don't buy the home, you will loose the money that applied to your lease purchase.
Pros and cons to Buying
If you have decent credit and the budget to maintain the home, buying has advantages as well. As the homeowner, part of your payments will build your equity. Plus, you'll have tax deductions on the interest portion of your mortgage payment, private mortgage insurance, home loan down payment and property taxes.
The downside of homeownership is the money required for upkeep, repairs, insurance, taxes and other requirements. Whether you buy or lease to own, have the house inspected before you sign a contract. You don't want to buy a home with problems today or three years from now. And you don't want to make payments on a lease-to-own contract for years only to discover that the house has major issues.
Leasing to own is a good choice if you are okay with the terms. It gives you claim to the home without requiring you to take immediate ownership. If you decide to buy and want to compare the home to other properties, get free real estate listings at RealtyNow.