A lease option is an arrangement between the buyer and the seller to purchase a house after renting it for a specific period of time. A portion of the rent would be applied toward the purchase if the option is exercised. This is referred to as rent credit. Most institutional lenders will accept rent credit as part of the down payment, if rental payments exceed the market rent and if a valid lease-purchase agreement is in effect. A copy of the valid lease-purchase agreement must be attached to the loan application. Read any lease option arrangement carefully for details about transferring the option and other important concerns.
TIP: For information on lease options, contact your CENTURY 21® Agent.