Princeton Town Topics – Let’s Talk Real Estate – October 3, 2007
SELLERS: TRY LEASE-OPTION
If your house has been sitting on the market longer than you’d hoped, and you are feeling the financial crunch of covering mortgage payments on two properties, you should give some serious thought to a lease-option.
A lease with an option to buy can ease your mortgage squeeze while giving a cash-poor buyer a chance to buy a home. At the same time, some of the monthly rent goes toward a down payment on the property.
With a lease-option, the seller will charge the buyer a non-refundable fee (usually one to two percent of the full selling price of the property). Over the period of the lease, the buyer will pay rent that includes a percentage toward the down payment. At the end of the lease, the buyer can decide to purchase the property or forfeit the initial fee and rent. Using the Lease-Option alternative will give the buyer time to secure a loan and the seller some financial breathing room.
