FAQ  -  Frequently Asked Questions

Frequently Asked Questions

Question: How do lease options work and what are the benefits?

Answer: A lease option is an arrangement with you and a seller to exercise the option to buy a house after you have rented it for a specific period. A portion of your lease (rent) can be applied toward the purchase if the option is exercised. This is referred to as lease (rent) credit, which most institutional lenders will accept 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.


Question: I've had credit problems - a bankruptcy about 1 1/2 years ago - but would like to get my family out of the apartment and into a new home of our own. How can a lease option help?

Answer: Most lenders will want to see a clean credit report for 2 years after a bankruptcy. A lease option is a perfect way to have the benefits of home ownership while giving you the needed time to clean up your credit and also build up a nice deposit for closing.


Question: How long do most lease options last?

Answer: Its completely negotiable. Most are from 1 to 2 years. If you are the tenant/buyer, you might want as long a term as possible. If you're the landlord/seller, a 1 year term is good, but you can negotiate. It all depends on your situation, your needs and your deposit.


Question: How much money do I need to get into the lease option program?

Answer: That depends on the price of the home and your credit. But typically 3% to 10% of the sales price is customary and acceptable. Remember, we want to show the lender you put a deposit upfront at the beginning of the lease option.


Question: We've been transferred to a new area, and are basically starting over. We both have new jobs but only been working for about 1 year with the new company. How long do we need on our new job?

Answer: Most mortgage companies can get you qualified with 2 years worth of time on the job. The lease option lets you build up that time.


Question: Why have I never heard of lease purchase before?

Answer: Lease purchase has been around as long as there has been Real Estate. It goes by several names, like "rent to own", "lease option", "option to purchase". You probably haven't heard of lease purchase because few real estate professionals truly understand this powerful and fantastic financing concept.

Ephraim Enterprises, LLC

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