Some of you may want to use a lease option properly, so here are some guide lines.



1.Start with a fair price.

Sellers, yes your entitled to a premium; but you want a large chunk of the buyer’s cash now! You also want higher than market monthly rent payments.

Buyers, you want an opportunity, but you don’t want taken advantage of. If you’ve read this far you know you have other opportunities!

2. Everything has to be in writing! Preferably notarized!

3.All payments must come through the buyer’s checking account and be deposited to the sellers account! Keep your canceled checks and bank statements! These payments are best made through a third party like an escrow company of a bank’s trust department.

Never let any payment get 30 days late!

4.To have your equity recognized by a future lender you’ll have to show where the option payment came from and that the seller received it! Keep good records.

For any part of your monthly payments to be recognized towards your down payment you must show that, that portion of the payment was higher than the market rent. (This means you must be able to prove what the market rent was at the start of the lease, you can do this your self but it’s best to let an appeaser do it!)

Some sellers are willing to credit large amounts towards your purchase. The lender’s rules don’t change your contract! If you have credits beyond what the lender will recognize the lender will determine your rate based only on the percentage they recognize!

5.Never walk away from an option without having the property appraised! I had a family member do this only to find out the property sold three months later for more than twice their option price!

6.Most important: if the buyer wants to own the property and the seller doesn’t want it back, the buyer should counsel with a knowledgeable mortgage broker before entering into a binding contract! Time can cure almost any credit problem but you must work towards that goal. Some credit problems disappear with time alone. Other credit Problems demand active attention!

7.No matter what your reason for not buying outright check with a knowledgeable lender before committing your money.