A lease option allows a renter to sign a lease with an option to purchase the property for a specific price within a certain time frame. In most lease-option situations, a portion of the rent is applied to a future down payment. This is referred to as rent credit. Institutional lenders accept rent credits as part of the down payment if rental payments exceed the market rent and if a valid lease-purchase agreement is in effect, a copy of which must be attached to the loan application. Lease options are most popular among buyers who don't have enough funds for a down payment and closing costs.
Lease options give sellers several advantages, especially in a slow market.
Also, the renter is more likely to treat the property like an owner. Inc. All Rights Reserved.