There are times when people cannot find buyers for their homes, yet these individuals may need to move. To avoid having two mortgage payments to make, people in this situation sometimes turn to lease to own deals. You should consider this option if you want to avoid having two mortgages but cannot find a buyer. Selling through a lease to own deal is an alternative way to sell a house and will require a real estate attorney, but it can be a smart idea. Here are several things to understand about these deals and how they work.
You Find a Buyer Who Cannot Get a Mortgage
People who purchase homes through lease to own deals typically use this method because they cannot qualify for mortgages. They may have bad credit, or they may have a recent bankruptcy on their records. People in these situations still want to become homeowners, though, and buying through this deal allows them to achieve this goal.
The Buyer Pays You in Two Ways
After locating a buyer, he or she pays you in two ways. First, the buyer gives you a down payment. You can choose this amount, but you should make sure it is a significant amount of cash. Next, the buyer makes monthly payments to you. These payments are the mortgage payments, and you are like the bank in this deal.
The Buyer Has Rights and Responsibilities
When you sell through this method, your lawyer will help you learn what the buyer's rights and responsibilities are in the deal. The buyer has rights to live in the house and use the home as it is his or her own. The buyer must make all the payments to you that he or she owes, and the buyer must also care for the house. The buyer in the deal pays the property taxes on the home, all the repair bills, and the home insurance.
You Have Rights and Responsibilities
Your lawyer will also help you learn your rights and responsibilities. For example, you have rights to take the house back if the buyer defaults. You have the responsibility of keeping home insurance on the property, too, because you will still have a loan on the house through a lender.
If you consider this option, you must hire a real estate attorney. Drawing up a legal and protective contract is a necessity for you and the buyer, and a real estate attorney, like Souders Law Group, can help you create the contract and work out the terms.