Homeownership is considered an important goal for many Americans. The attractive curb appeal, the manicured lawn, the white picket fence…it’s the bread and butter of the American dream. But for many millennials–our nation’s rising generation of homebuyers–traditional methods of buying a home may be a financial impossibility for a significant amount of time because of the burden of student debt (or, for those without a college degree, the struggle to achieve financial growth because of job availability). Do these generational challenges mean the dream of owning a home before you’re 35 is totally out of reach? Not so much as you might think! Let’s talk about how YOU may be able to afford YOUR OWN HOME–with a lease purchase!

A What?

A lease purchase! It’s a homebuying method that isn’t dependent on you qualifying for a mortgage. Basically, you pay a little up front, agree to a monthly payment for a lease term (sometimes one year, often two or three years), and at the end of the lease term, you have the option of purchasing the home for the agreed upon price (not affected by an increase in the appraisal of the house).

Like many things in real estate, though, it’s one of those things that does depend on who’s handling your buying process, so let’s define some terms for how A O Home Solutions, LLC handles lease purchases: First of all, we don’t distinguish between lease purchases and lease option (what many call ‘rent to own’). The reason is, we want it to be clear from the beginning that a lease option doesn’t make the home a rental–you are a buyer, not a renter. You can walk away once the lease contract is fulfilled, but you are still responsible for any repairs or maintenance of the home during the term because it’s technically yours. But again, if you reach the end of your lease, you are not obligated to buy the house! You can walk away with no foreclosure or credit reduction! A pretty safe way to buy, huh?

So Why Do It?

The guiding principle of house buying is to do what you can do. Can you qualify just fine at a bank? Then go that route! If you can get in with a mortgage, that will be a great option for you! The problem is, many people can’t get in with a mortgage because of their credit history or other extenuating circumstances. For those people, a lease purchase is quite sensible, and it can have several benefits:

• You can have your new home in as little as three days. Because there’s no waiting on bank approvals, the process can be rather quick.
• The price you are paying for the home is fixed and will not go up over the term of the agreements. Even if the appraisal of the house goes up by $10,000 or $100,000, the price you agree to with us is the price you pay when you refinance later.
• This system gives you a house without the bank.
• You are not renting–you are purchasing a home. Follow the contract and the home is yours.
• You usually have two or more years to refinance.
• If after you want to leave after the contract is fulfilled, you can! There is no foreclosure or hit on your credit.
• If you need a little more time to qualify most owners are very accommodating because you are a buyer, not a renter.
• Some sellers will allow the buyers to do a lease purchase for many years.
• Many times you get the house at a reduced rate, both in total price and monthly payments (often cheaper than rent).
• Sellers often want to move fast and will take less for their homes, knowing you are a buyer going to move in fast.
• Lease purchase buyers are viewed as buyers and not as tenants, so the monthly payment often just covers the mortgage, and the seller will allow a buyer to move in at a reduced rate.
• If you find financing quickly, great! Everyone is happy, and there is no prepayment penalty!

Written by Ben Mix

So is a lease purchase a good option for you? You can always ask! We are happy to answer questions and help you find the best solution to get you in your own home! Visit our main website, or just give Mark a call at 770-480-0209.