The Real Estate Encyclopedia
Lease to own
Category - Real Estate Glossary - Real Estate Terminology
Lease-to-own is a term that refers to renting the home now but including a contract to be able to purchase that specific home in the foreseeable future. This is also refered to as a rent-to-own purchase or a lease purchase. The purchase option, is an option at a option fee agreed to by the parties. This option fee, up to 5% of the current value of the property, is a cost to the borrower since he is getting the benefit of the option. The borrower pays rent, and an additional rent premium that is also credited to the purchase price. If the purchase option is not exercised, the buyer loses both the option fee and the rent premium.
Real Estate Glossary - Real Estate Terminology
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