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Lease / Purchase… What is this?

January 21, 2010

More and more people are being turned down for a home loan in today’s limited credit climate. Banks a few years ago were writing loans to individuals that had no business getting a home loan. Now the pendulum has swung the other direction, where the lenders are making the qualification process almost impossible to receive a home loan.

So enters the lease / purchase agreement… What does it mean to enter into a lease / purchase contract for a home? Well, this is a preliminary step to becoming a home owner when there has been some reason that you didn’t qualify for a mortgage immediately. This agreement usually requires a significant deposit (3 to 10%) and a monthly rent payment. The advantage to this contract is that it gives you the opportunity to live in the home as you are qualifying for a mortgage. The reason that this agreement is appealing to the home owner is it immediately relieves them of the house payment. The disadvantage is that you do not own the home yet.

Why I like the lease / purchase agreement is simple. It allows me to sell my home quickly to deserving individuals who are usually trying to put there life back together after some misfortune (normally divorce or some medical reason) in the past that still plagues them. This does not come without a price. It now requires an amount of effort on both of our parts. I have to wait for the sale of the home and help them clean the issues off their record that is tarnishing their credit score. The buyer has to adhere to a strict budget that usually requires a lifestyle change to become a better steward of their finances.

The goal is clear when we enter into these contracts even if the amount of time to realize this goal may take several months to possibly a year or more. However, when the true closing date comes, everyone is happy and a homeowner is born.

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2 Comments leave one →
  1. bandsxbands permalink
    February 3, 2010 12:27 PM

    My friend and I were recently talking about how modern society has evolved to become so integrated with technology. Reading this post makes me think back to that debate we had, and just how inseparable from electronics we have all become.

    I don’t mean this in a bad way, of course! Societal concerns aside… I just hope that as the price of memory drops, the possibility of uploading our brains onto a digital medium becomes a true reality. It’s one of the things I really wish I could see in my lifetime.

    (Posted on Nintendo DS running [url=http://knol.google.com/k/anonymous/-/9v7ff0hnkzef/1]R4i[/url] DS ComP)

    • February 4, 2010 3:32 PM

      Well… you make me think… I’m not sure I’d like to upload the contents of my brains onto a memory stick. I’m really concerned by a few things there… the least one would be scaring people off.
      But who knows?

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