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Check out the lease option to buy
by Annie Christian
Jun 29, 2012 | 5112 views | 0 0 comments | 27 27 recommendations | email to a friend | print
If you have been a recent homeowner, you know renting is a waste of your money.  But if you have been through a short sale you cannot buy another home for three years —or can you? What if there was a program that would allow you to own your own home right after a short sale, in spite of your bad credit. Yes. The “lease option” is a great program for you to own your next house. I have been to many lease option presentations in the Reno area recently, and here is what I found out:     You do not need to have good credit to be approved for a lease option.   

Basics of a lease option

Investors approve your credit based on your future ability to buy. They provide a pre-approved amount so you can go shopping for a home right now. You enter into a contract and you are locked in a future sales price for up to five years. Your monthly payment provides you with a 20 percent credit toward your future down payment. Investors cannot sell the house without your consent. You can sell your contract to another buyer. You keep the equity – any money over the locked in price when you buy the house (usually three to five years down the road).

A lease option is right for you if you:

Are a recent homeowner and have lost a home due to short sale, bankruptcy or foreclosure;

Have insufficient credit history but you have a verifiable stable work history;

Have credit that is repairable and you could qualify for a home loan in three to five years; or

You still plan to live in the same area for the next five to 10 years.

There are five easy steps to a successful lease option:

Step 1: Attend a lease option presentation. Ask questions, gather information and find out how much you qualify for on the spot.

Step 2: Get pre-approved and go shopping with a real estate agent. Secure a home that fits your budget.

Step 3: Enter into a lease option to buy contract. Know what your future sale price is and what your monthly payment is.

Step 4: Take good care of your house. Any improvements you make to your house build equity. You keep any equity over the set price in the lease option contract.

Step 5: Start working on rebuilding your credit.

Frequently asked questions

Q: Is there any flexibility in a lease option contract?

A: Yes. Let’s say you need to move out of the area due to a job transfer, divorce or medical hardships. You can sell your interest in your lease option to another buyer.

Q: What can I recover from the lease option contract?

A: You can recover the 20 percent lease option credit that you have been building up during the lease option from the sale.

Q: Can I buy the house sooner than five years?

A: Yes. Most homeowners are able to buy three years from a short sale.

Q: Where do I get the lease option money?

A: Most homeowners are getting money from their bank when they are short selling. Homeowners are using this money to get into a rental or a lease option contract that make more sense to them. Also, you can cash money out from 401(k), savings or stocks to get into a lease option program so you do not need to rent.

Q: Where is the local lease option program?

A: Hughes Private Capital is a local organization that brings investors and buyers together every week. Their website is Go to the section “Lease to Own, tell me how.” This section consists of dozens of slides that will explain the program in details to you.

Q: How often do they hold the lease option presentation?

A: They hold presentations on a weekly basis. Some busy working professionals prefer to set up a more convenient telephone interview.

Q: Is a lease option right for everyone?

A: If you have bad credit and have a stable work history, you are a victim of the real estate bust or you don’t want to throw away rent money for the next three or more years you might want to check out this program and talk to a loan officer. 

If you are paying an average of $1,200 for monthly rent for the next three years (36 months), your total rent comes to $43,200. Do yourself a favor and check this program out.

Annie Christian is a real estate broker and owner of The Annie Christian Real Estate Group. She helps with everything from buying and selling to foreclosure and short sale. To submit a question, call 351-5117. Her website is
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