Real Estate: Florida/qualifying
QUESTION: I am looking into a rent to own property. At this point all I can do is look. But at any rate, I was looking at a web site (rentuntilyouown.com) and there was a section with the mosts:common pitfalls and how to avoid them.
the one I have the most trouble with is "Option period expired before you qualified in a rent to own" My first problem is: what do I need to qualify for? And 2nd)what option period? The answer didn't explain this. I live in Gainesville Fl
When you enter into an agreement or contract for a lease to own (rent to own) there is whats called an "option" or "option to buy." This option or option to buy costs money upfront and is non-refundable. This option or option to buy gives you the right to buy the property within a certain amount of time and at an agreed price.
If you do not exercise the option to buy you do not get your money back. So, if you can not qualify for a loan and you do not buy the property you lose the money you paid for the "option."
As for your question about qualify... I believe that is qualifying to get a loan to buy the property. As for option period...the option period is usually for the term of the lease. But, it can be shorter.
So, lets say you sign a lease for one year and you pay $1000 for the option to buy the property at an agreed price during the term of the lease. Your option period would be the one year or the lease term. If the option period was for 6 months you would have to buy the property within 6 months.
Be very, very careful about these types of contracts. There are lease to own companies or operations that prey on people that really do not understand what they are getting into. They get people all excited about the idea of buying a home when they know all too well the person will not qualify or never exercise the option to buy. Why do they do this? Simply, to keep the upfront option money. It is basically extra money in their pocket that is on top of the monthly rent.
I hope that makes sense. If you still are fuzzy or have questions get legal help. Hire a lawyer or contact legal aid in your area for help...google legal aid in your area.
Olde Town Brokers, Inc.
---------- FOLLOW-UP ----------
QUESTION: ok. the qualifying part I get. But the option thing.. This is already a 'rent to own' option. Is there another option?
No idea...I would need to read the "rent to own" purchase contract. Ask for a copy of the contract. If they do not want to give it to you...do not do business with them. If they give you a copy, read it and I think it will clearly state what the "option" is and costs.