Still more potential buyers have credit problems and debt loads that would get them laughed out of a lender's office. For these people, nontraditional purchase methods are either the best, or only, option. But that doesn't always work for everybody. Buyers have several ways to purchase without a standard bank loan, each of which has benefits and drawbacks. Some of the more complicated plans go by different names in different parts of the country, but the most popular ones are generally called lease options, contracts for a deed, or installment contracts and seller financing.
Consumers can also pay all cash, assume the seller's mortgage or borrow from a relative.
A l ease option combines features of buying and renting. The buyer leases the home from the seller under a contract that spells out how much the monthly lease payments are and for how long the buyer will make them. A portion of each payment generally goes into a type of savings account for use toward purchasing the home, which the buyer has the right, but not the obligation, to do at the end of the lease term. It's great for people who don't have a lot of cash, No. 1. If not, you can walk away from it.