Lease options, a.k.a. rent to own homes, sound enticing. Rather than paying rent strictly to a landlord without any long-term benefit, a portion of your rent and a portion of your deposits are set aside for your eventual down payment.
What most people considering rent to own homes miss is the 800-pound gorilla sitting in the room: at the end of the lease period, you’re going to need to qualify for a loan to purchase the property. (Exception: if the seller is willing to finance personally, but if they were willing to do that you probably would go down that road up front.)
Considering rents on most lease options are higher than the going market rate (the owner usually sets aside the difference), there’s little involved that a dedicated renter can’t do on their own. Simply rent and set aside the difference each month. Save it yourself rather than depending on the owner to hold it.
At the end of the lease on a traditional rental, if you elect not to purchase you simply go find another property. At the end of the lease on a lease option, 99 times out of 100 you’ll be forfeiting all of the extra money you paid in, further delaying your opportunity to buy a home.
Buying through a lease option should be a person’s absolute last option.
[tags]Phoenix real estate, lease options[/tags]