Leasing a home is an option for those who want to eventually own their own home but may be finding obstacles in the traditional method of meeting their goal. The key to leasing a home is in researching and understanding how the process works for the homeowner who often carries the note on the property and the leaser who is paying additional money to rent the home for a specified period of time until enough money or credit is obtained to purchase it. The process of leasing homes is different for every geographical area and often varies from state to state. Traditional loans for homebuyers is regulated nationally and within the state but this may not be true for rent to own or lease to own homes.

When a homebuyer is shopping for a home, he or she is often limited by the large percentage of money needed for a down payment as well as the closing costs and inspections needed. The typical down payment for traditional purchases carried by a mortgage is twenty percent of the purchase price. This can range into twenty or thirty thousand dollars depending on the market values. That is why many people are unable to purchase homes, especially those in areas where the economy is depressed and jobs are few. Credit ratings make a difference in the ability for potential homebuyers to purchase homes.

Low income homebuyers are encouraged to consider the lease to own option of purchasing a home. How the process works differs from one situation to another but generally the amount of upfront money needed to move into the home can range from three to seven percent of the purchase price. The amount of money paid at the beginning of the lease to own process is usually used for a down payment on the property. It is important to do some research into the home and area that is offered before settling on a price and time for leasing. This is for the protection of the buyer who is leasing the home and the seller.

Contracts that are beneficial to both sides are the best. It gives the homeowner who is selling the home a chance to have a longer term renter who will have a vested interest in the home after the leasing period is over and they may have the option to buy it. For the person(s) who are leasing the home, it offers the chance to build their credit and actually be able to afford a home after the leasing period is over.

The contract should clearly specify the obligations and responsibilities of both the homeowner and renter. The renter should make sure that the contract spells out the details as to money given at the beginning, monthly rent and who is responsible for repairs, inspections or payments for irrigation if needed. It is a good idea to have it set in writing who will pay for damages from weather if it occurs. The dollar amounts should be clear and the amount of time the lease is good for. Pay attention to the wording of the lease or lease option clauses. They can save a great deal of money and aggravation if the person leasing the property is unable or unwilling to purchase the home at the end of the lease.

For the seller, also known as the homeowner, the protections offered by a lease to own mean that the home will be occupied by a long term renter who will be emotionally invested in the property and take better care of it because they will own it. There are renters who simply do not care about property, but they can be detected by doing your research and checking references to find out if they are the right type of people to be leasing to own your home. The amount of money paid at the first part of the contract is often put aside for the down payment but it can earn interest and is often forfeit if the renters do not live up to their part of the contract.

The details and knowledge of how the process works are not difficult to understand but it is beneficial to both parties that they be understood clearly and any questions cleared up before they are signed. For those who want to lease the home, it is important to be honest about the financial situation you may be in. You can also investigate and research the home and the owner to make certain the contract is right for you as well. For the homebuyer, it means they are able to lock in the price, which is important if the market value rises as there are fewer homes available for sale. It is a good idea to purchase rental insurance to protect the home and contents while renting. After the home is purchased, change to homeowners insurance.

The process can get confusing if there are a lot of options and exclusions in the contract. Be wary of homeowners who have vague wording as to how the details of financial processes are handled, property descriptions that are not complete or clauses allowing for evictions on extremely short notice. A homeowner may have an option to protect against losing money if excessive damages occur while you are leasing the home or if the property is not taken care of. If you have adults who are living with you, make certain their names are included in the contract. If you don’t, the owner may evict you. This has happened in some populous states with vague laws regulating the lease to own options in contracts.

Consider the possibility of the seller backing out. What protections are in place in the lease to protect your investment and the money you have paid as an option payment to lease the property. These are important things to consider. If you come across a situation where your instincts tell you something is not right, slow down and take a long look at the situation. You might even have a legal expert check out the contract and property for your protection. If in doubt, don’t sign anything, just find a different place or continue to rent to build up your credit and reduce your debt. It is better to wait if you are not sure, don’t jump at the first place that comes up.

The best places to find lease to own homes may be by networking with people you know. Companies that list rent to own or lease to buy homes often charge monthly fees to view the lists they have compiled. That is an added expense you don’t necessarily need to mess with. Make certain that the rules are spelled out about the property inspections and what happens if the property does not pass or has been damaged between the time you decide on it and move in. These things will save you a lot of aggravation when leasing a home to own. Keep your eyes and ears open, take time and ask a lot of questions, remember the only unintelligent questions are those you do not ask.