A lease purchase agreement is a contract between the buyer and seller in a real estate transaction. Lease purchase contracts are commonly known by terms like lease option, lease with option to buy, lease purchase, LP and lease and purchase agreements.
What is a Lease Purchase Agreement?
A lease purchase (LP) is typically used in a case where a buyer wants to buy a home but for certain reasons cannot qualify for a conventional mortgage at this point in time. This can be for a variety of reasons, maybe they have credit issues that need to be resolved or need time to save for the down payment. Some buyer who are self employed may need time to establish the required employment verification and still others may need to sell an existing home before they commit to a new home.
On the other hand, lease with option to purchase contracts are ideal for sellers who need to sell their home quickly may or an investor who needs to improve his cash flow. Lease purchase arrangements are very beneficial for those who have been transferred or have lost their job and must move quickly. The immediate rental payments typically cover most if not all of the existing monthly mortgage payment and relieve a large financial burden from sellers who see themselves in this situation.
