If you're ready to buy a home, but your credit or savings isn't quite ready, a lease option could be your best option. A lease option offers homeownership opportunities to consumers with little cash and/or poor credit, who are prepared to bet on themselves. The bet is that before the option period expires, they will qualify for the mortgage they need to exercise the purchase option. During the option period, they have the opportunity to rebuild their credit and accumulate equity while living in the house. Before you begin a lease option you need to ask yourself a few questions:

• Can you afford the option money? The option money is required for a lease option contract to be legitimate. This upfront payment is usually between 3-5% of the negotiated sale price. All of this money will go toward the purchase price of the home if you decide to buy the house. Unlike a security deposit, you don't get the option money back at the end of the lease if you can't purchase the house or decide not to.
• Will you be able to obtain financing at the end of the lease term? Most of the time, the buyer will need to find his or her own financing by applying for a loan. Use the lease term time to rebuild your credit so when it comes time to apply for a loan there are no hold ups.
• Can you afford the monthly payments on the lease? The monthly payments on a lease option will include a fair rental price plus option money that will go toward the purchase of the home. Thus, the monthly payments in a lease option will usually be more than you would pay if you were renting the same house.

1. Find a house you want to buy
   Keeping the above considerations in mind, look for a house that fits your needs and your budget. There are some companies that specialize in lease options, however, you can just find a house for sale and see if the owner will consider a lease option. Use LeaseBuyOption.com to search for a house and contact the company to see if they work with lease options.
2. Negotiate the terms of the lease option
   Purchase price, term of the lease, the amount of initial option money, and the amount of the monthly payments that will go toward the purchase price.
3. Make monthly payments
   You will make monthly payments just as you would make rent payments, however, a portion of the monthly payment will be designated as option money. This money will go toward the purchase of the home if you decide to exercise your option to buy. The percent of money that goes toward your purchase is something that is negotiated between you and the seller.
4. Apply for a loan
   Don't wait until the last minute to apply for a loan, to be safe you should probably start a full two months or more before your lease term ends. To acquire a loan you must complete a loan application and present supporting documentation. Documentation may include recent pay stubs and tax returns for the past two years. Your loan officer will let you know the paperwork they require.
5. Close on the home
   If you've lined up your financing and decided to exercise your option to buy at the end of the lease, congratulations - You are now a homeowner.

A lease option may be the perfect solution for someone selling their house in a buyer's market. Lease options, in which you rent/lease your property to a potential buyer who has the option to buy the property at the end of the lease term. This structure is set up for people who want to buy a home but, for one reason or another, aren't quite ready to make the purchase yet.

1. Decide if a lease option is a good option for you
   If you need all the money from the sale of your home right away, you're better off with a straight sale. You might also think twice about a lease option if you are unable or don't want to keep up with the responsibilities of owning a home. In a lease option situation, the owner must continue to pay property taxes and insurance and is generally still responsible for major repairs during the lease term.
2. Post your house on LeaseBuyOption.com
   LeaseBuyOption.com is the only real estate search engine that specializes in lease options. Ads for lease options typically receive a tremendous response, so you'll likely have plenty of potential buyers to choose from. All interest in your properties will go directly to you; potential buyers will contact you via email or phone. And don't forget it's free!
3. Do your work; pull a background check on applicants
   You don't want to do a lease option with somebody you wouldn't rent to. Look for someone with a steady source of income, good references, and the ability to pay the rent, plus the additional monthly option money. Keep in mind many buyers who choose lease options do so because they have bad credit and want to improve it before they apply for a loan.
4. Provide the potential buyer with a seller's disclosure form
   The disclosure form lists any known problems with the house. This form is standard for other purchase transactions but is sometimes left out in a lease option. The form is to help them make an informed decision and to protect the integrity of the contract and sale.
5. Negotiate a fair contract and collect option money
   You can get a lease option contract form from a local real estate agent or attorney. Unless you really know what you're doing, get help with the details of the contract from an attorney. Make sure you cover who is responsible for what types of repairs and other complications that come up.
   • Agree on the purchase price of the home
   • Determine how much option money to collect.
   • Decide how much of the lessee's monthly payment will be credited toward the option.
   • Decide on the term of the lease at the agreed-upon price.
6. Collect monthly payments
   Keep track of the payments received so you'll have a record when the time comes for the lessee to exercise the option. "He who keeps the best records wins".
7. Sell the house
   At the end of the term the lessee can exercise the option to buy the house for the price specified on or before the date specified. The total option money paid will go toward the down payment.