As a buyer, you have the fever to purchase a new home, but because of credit issues you are unable to qualify for a mortgage. A seller offers to “lease/purchase” their home to you.
Typically, the seller wants a significant down payment. This down payment belongs to the seller until you close on the property. At closing, the down payment will be credited to you. Then of course, you make your monthly payments like a renter would. Who pays the taxes, repairs to the home and when the closing date will be are all negotiable between you and the seller.
The beauty of a lease/purchase is that it will allow time for you to correct your credit and be approved for a loan.
Sounds Good! Here are the negatives…
What if you are unable to correct you credit issues in that period of time?
What if the seller fails to make his mortgage payments and the home enters the foreclosure process?
What if you decide not to purchase the home at the end of the period?
What is the home needs significant repairs that were not obvious before you lived in the home?
Under all of these circumstances and more, you will lose your down payment.
It is just RISKY! My best advice when asked this question…Rent, Repair Your Credit, and then make a purchase. You can’t lose!
If you just have to have the home and the only way you can purchase it is through a lease/purchase, please use an experienced REALTOR and an attorney!