THE LEASE-PURCHASE
AGREEMENT
Information buyers need to know to protect
themselves before entering into a lease-
purchase agreement
DO NOT LET A BUYER’S DESIRE FOR HAVING A NICE
HOME FOR THEIR FAMILY
END UP LIKE THIS
Buying a home is part of the American Dream for many people.
The purchase of a home is the largest purchase most people will
make in their lifetime. For that reason alone, it is very important
for prospective buyers to examine all of the possible options
available to them. Many prospective homebuyers are eager to
fulfill this part of the American Dream and may be tempted to take
the first ‘good deal’ that comes their way. The housing market is
full of 'good deals' that can turn out to be traps for the unwary. It is
important for prospective homebuyers to examine all options so
their new home doesn't turn out to be more - or less - than they
originally bargained for.
WHY DO LEASE-PURCHASE AGREEMENTS EXIST?
Without an adequate and reasonably secure income stream,
excellent credit, and a large down payment, it is hard to qualify for
a home loan from a conventional lender. Qualifying for a loan is
even harder, sometimes impossible, without a social security
number. While there are some legitimate alternatives for
homebuyers who cannot qualify for a conventional loan, these same
options can sometimes lead to a less than desirable result. For some,
unfortunately, these non-conventional financing tools may be the
only options available. Some dishonest sellers may pretend to sell
houses when, in reality, they are renting them. The sellers may set
up the sale in such a way that it is easy for the buyer to lose both the
house and the down payment made on the house.
Sellers typically use one of three methods to accomplish their goal:
(1) a lease with an option to purchase, (2) a land installment
contract or (3) a wrap-around mortgage. In order to understand
how these alternatives differ from a conventional mortgage, it is