[bentlebee]

What is a lease purchase and how does it work? I saw on ephizz.com that they have a house that I like for lease purchase, but I don't know how it exactly works.

[SKB]

Some of the rent you pay will go towards a down payment.

So for example if you pay 2,000 per month 1,000 will go towards the rent and the other 1,000 will be held towards the down payment. After lets say a year lease you have a 12,000 down payment to buy the house.

This is not a good idea right now, the price you negotiate now would not be the fair market value same time next year.
Best idea is to continue renting and save your own down payment and buy a house when the market stops crumbling. If you buy now you most likely will over pay.

SKB

[firemed]

This is as bad as the I buy homes cash people. Stay away this is just a way to make cash for the seller. Most people don't end up with the home but dump alot of money into upgrades and upkeep. Its just the market is in a down swing and its easy to have a full time renter locked in till the market starts to rise. In most cases the owner finds a way to break the deal or ends up selling it a higher price then the market is at. Its a win win for the seller knowing the buyer won't have the money to take it to court.

[bentlebee]

What if you have bad or not so great credit score and really love a house. isn't it a smart move to lock in a sale prices now the market is down and you can have your credit score up and than buy in a year? Or is this still a bad thing to do?

[SKB]

Originally Posted by bentlebee

What if you have bad or not so great credit score and really love a house. isn't it a smart move to lock in a sale prices now the market is down and you can have your credit score up and than buy in a year? Or is this still a bad thing to do?

What you do in this case is walk away and spend a couple of years working on improving your credit score.
How you do this is by paying your bills on time each and every month and never make a late credit card payment again. Pay down the balances of your cards and loans and do not take out any more credit.

I promise you this beyond a shadow of doubt, there is always another house to fall for.

It is never a good idea to make a major purchase with bad credit. Predatory lenders see you coming a mile away and take full advantage of this. Even with this lease idea which is a horrible idea, you do not need to do this to work on building up your credit scores. Just follow the advice above.

When you have good credit again, (excellent is better though), you will be in a far superior bargaining place with the lenders on the interest rate you will negotiate for yourself. People with low credit scores can not negotiate their interest rates.

Also, save at least 10% as a down payment.

Don't end up like the thousands of people that are losing their homes because they bought with bad credit.

SKB

[bentlebee]

So if I understand it well, you have to use the credit score that you have at the time of signing the lease purchase? I thought since i have savings left to make a down payment and pay the monthly rent and at the time of buying the house (or a little bit earlier) , go to the bank and get a mortgage since my credit score will be up so much ( a year or so from now)

[SKB]

Originally Posted by bentlebee

So if I understand it well, you have to use the credit score that you have at the time of signing the lease purchase? I thought since i have savings left to make a down payment and pay the monthly rent and at the time of buying the house (or a little bit earlier) , go to the bank and get a mortgage since my credit score will be up so much ( a year or so from now)

No, you would use the score at the time of the mortgage application.

Like I said, it is a very poor financial move for anyone. Lease to purchase is something someone would do that doesn't know any better.
Now that you have been made aware of it, you would be a big fool to go ahead and do it.