Lease to Own Houses
Lease to own houses are an alternative to the traditional mortgage, which most people buy their homes with. Buying a house lease to own can help to manage financial risks for both you and the seller and can be a way of having a house to live in if you are feeling unsure about whether you want to buy a house or may not be living in a particular area for very long. Buying a house lease to own may also be able to help people with low credit scores.
How does lease to own work? Basically, instead of buying a house outright with a loan, which the bank secures with a mortgage, you will pay a set monthly rate to live in the house while you pay for it. Eventually this will add up to the value of the house (frequently plus some extra for the lease to own service), and it will become yours. Until you either pay for it in full, or in some states pay off a certain percentage of the house’s value, the seller owns it, rather than you. This way, if you find yourself unable to continue to pay for the house, it will be returned to the seller and you will not have to worry about additional debt liabilities, as you may with a mortgage foreclosure. When you buy a house lease to own, the renter also does not have to worry about the financial risks of foreclosure proceedings and sales.
The average Californian’s credit score is 754. A foreclosure or short sale can have a variable impact on your credit score, but generally it will hurt it. To keep track of your score, it is worth getting your score before and after a foreclosure to monitor its effect. Since you are not getting a traditional loan when you buy a house lease to own, a low credit score may not be a bar to buying a house in this way. Houses can be better than apartments or rentals for many reasons, but one important financial one is that house owners can frequently get serious tax deductions.