Desoto County Mississippi Real Estate
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Desoto County Mississippi Real Estate
Hernando, Olive Branch, Southaven, Nesbit & Walls in Desoto County
Mississippi
| Q: | What is a lease option? |
| A: |
When a renter
signs a lease with an option to purchase the property
for a specific price within a certain time frame, that
is called a lease option. In most lease-option
situations, a portion of the rent is applied to a future
down payment.
Lease options are most popular among buyers who don't have enough funds for a down payment and closing costs. |
| Q: | How do lease options work and what are the benefits? |
| A: |
Most
lease-option agreements specify that a portion of the
rent on the property in question is applied toward the
purchase if the option is exercised. This is referred to
as rent credit. Institutional lenders accept rent
credits 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 which must be attached
to the loan application.
For sellers, lease options give them several advantages, especially in a slow market. These include a monthly rent higher than market rent, top-market value for the property and tax-free use of the option consideration until the option expires or is exercised. Also, the renter is more likely to treat the property like an owner, tax-free use of option consideration until the option expires or is exercised. Lease-options should be read carefully for details on transferring the option and other important concerns. |
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Cara O'Bryant Realtor Associate Licensed in Mississippi & Tennessee 901-212-0047
Bob Leigh & Associates Realtors,
LLC |
