Lease Purchase Frequently Asked Questions (FAQs) for Tenant/Buyers

Questions regarding the terms of the lease purchase agreement are answered as if the landlord/seller were using the paperwork provided by LPHomes.com. Landlord/seller may use a different agreement with different terms.

Question: I just want to rent a place. How can I use this site?
Answer: Consider the benefit of having the option, not obligation, to purchase during your lease term? You never know what your situation will be one or two years down the road. If you plan on purchasing at some point, you might as well start preparing now. Place down money that goes toward principle. Stop throwing away rent!! Start getting "rent credit" each month that goes towards principle.

Question: I just want to buy a home. How do I use this site?
Answer: All homes are available for immediate purchase. I imagine most landlord/sellers may even discount their sales price if you are able to purchase immediately… although that is ultimately determined by each home's landlord/seller. Please register and see the contact info for the particular home you are interested in and negotiate with that person directly.

Question: What exactly is an 'option consideration'?
Answer: This is the money you are required to pay up front to the landlord/seller, instead of a security deposit (unless required law) or down payment (as required with purchase agreements). It is credited towards the principle balance of your lease purchase agreement. Additionally, most mortgage brokers credit the option consideration as a down payment under "traditional financing".

Question: Can I fill out an application online or can you tell me if I qualify for one of your homes over the phone or online?
Answer: The only way to determine if you qualify is by contacting the landlord/seller of the home you are interested in. Qualification is not done by this website. Tenant/buyers, please do not call us to get pre-qualified or ask if you qualify for a particular home. If requested, we give landlord/sellers contact information of mortgage brokers in their area that specialize in working with lease purchase agreements and/or first time home buyers.

Question: If my rental amount is $1000/mo and my rent credit is $300/mo, does that mean I actually only pay $700/mo in rent?
Answer: No. You pay $1000/mo in rent. If you decide to purchase after one year, you would have $300/mo credited back to you at closing ($3,600 within the first year).

Question: I just had a bankruptcy… will the landlord/seller still work with me?
Answer: That will depend on what your credit looks like after the bankruptcy (which must be clean), how much money you have for an option consideration to offset your risk, and the landlord/seller's motivation. A landlord/seller will make that determination once they qualify you. I recommend you see the home and talk to the landlord/seller. From our experience, if you can off set your risk with enough option consideration, you will be able to find a home to lease purchase.

Question: If I rent for 3 years, do I get 3 years of rent credit ($300/month rent credit x 36 months = $10,800)?
Answer: That will depend on your landlord/seller and the lease purchase agreement you enter into. Some agreements have the rent credit fixed for 1, 2, or 3 years... some have no limit.

Question: Can I convert to a traditional purchase using traditional financing after being in the lease purchase agreement for one month or do I have to wait until the end of the lease purchase agreement?
Answer: You can purchase the home at any time during the lease purchase term. You do not have to wait until the end of the lease purchase term to purchase. Owners may often set up incentives for you to convert to a purchase using traditional financing within the first or second year..

Question: Do I have to pay a security deposit on top of the option consideration?
Answer: Typically "No". You are required to pay the option consideration and first month's rent prior to moving in. Some landlord/sellers may charge a security deposit on top of the option consideration, which is sometimes mandated by state law.

Question: Do I get the option consideration or rent credit back to me if I am unable to purchase traditionally before the end of the lease purchase agreement?
Answer: No. These items are nonrefundable and may only be used during the length of the agreement.

Question: How long is the typical lease purchase term?
Answer: This is determined by the landlord/seller. They may pre-determine the time period up front or they may structure the term based on your individual qualifications. They are rarely shorter than one year or longer than five years.

Question: What if I can't purchase by the end of the lease term?
Answer: The landlord/seller is not obligated to extend the agreement, although most will consider extending an agreement. Terms of the extension mya change (purchase price, rental amount, rent credit, etc.).

Question: Can my rent credit or option consideration be used on any other home?
Answer: No. Both rent credit and option consideration is only credited toward the home you are lease purchasing… not other homes on the site.

Question: Do I have to pay the taxes, homeowners insurance, or homeowner's/condo fee during the lease purchase term?
Answer: During the lease purchase term you do not have to pay these items. You will have to pay these items once you convert to a traditional purchase using traditional financing... but you won't have to pay lease purchase payments anymore!

Question: Does the landlord/seller's homeowners insurance policy cover my belonging during the lease purchase agreement? Do I have to get homeowner's insurance during the lease purchase agreement?
Answer: The landlord/seller's homeowners insurance does not include your personal belongings while you are lease purchasing the home because, technically, you are a renter. I recommend you get "Renter's Insurance" to cover your personal belongings during the lease term. Example: If a tree falls through the house, smashing your personal belongings, homeowner's insurance will fix/replace the homeowner's house and belongings, but it won't fix/replace your belongings. We HIGHLY recommend renters insurane to all tenant buyers.

Question: Am I obligated to purchase the home?
Answer: No, you can walk away from the agreement at the end of the lease purchase term. But the option consideration is nonrefundable and you are still be obligated to the other terms of the agreement. Sometimes it better to do this when compared to selling a house if you purchase traditionally where you may have to pay real estate commissions or closing costs in order to sell the home.

Question: Why can't I just pay a large security deposit vice a nonrefundable option consideration?
Answer: The option consideration gives you certain rights under the lease purchase agreement that a security deposit does not give you under a standard lease agreement. A security deposit, when given back to you at the time of purchase is often viewed by mortgage brokers as a 'kickback' prior to selling (not allowing it to go towards your down payment). When taken in the form of a nonrefundable option consideration, most mortgage brokers allow that money to be applied directly to your down payment when trying to obtain traditional financing.

Question: Do I really have to perform all maintenance on the home?
Answer: Yes, you are responsible for mainainting the home and keeping it in good working order. Whether you perform it or hire someone to perform it. Think of it as the beginning stages of homeownership. If something large arrises, contact your seller/landlord and see what you can work out.

Get started now! Check the Available Homes section for a lease purchase home that to meet your needs!!