If you are a homeowner in who is at risk of losing your house then you need to take a look at what you can do to keep your home and have an easier time with paying it off. In some cases you might find yourself forced to sell your house at a loss. However, with our help you might be able to apply advance transactional techniques called Lease Options, potentially allowing you to keep your home, or squeeze most of its equity, instead of loosing it to the bank.
There are two techniques we will discuss, a straight lease option and a sandwich lease option. Both techniques are applicable to the current Real Estate Market. These are two choices that have their own differences and are worth mentioning as they could help you to sell your house and potentially even get money off of it or at least keep you from dealing with foreclosure.
First off: The Straight Lease Option
The lease option is a simple plan that works with a rental stage. You will lease your property to another entity who will pay you for the power (or option) to buy your property at a predefined price at a later time, usually 3 to 5 years. With this payment, you should take care of any outstanding overdue payments and late fees owed to your lender. Your new tenant (hereafter called the “optionee” because he holds the “option” to buy your house) will make monthly payments, which should cover your monthly mortgage payments. This rent should be higher than fair market rents, since you are giving this person the “option” to live in a house before they buy it. The type of person who agrees to be an optionee usually has less than perfect credit (relying upon the bad credit installment loans sometimes), yet wants the opportunity to buy a house.
The optionee will have the right to execute his option to purchase the property that you have rented before the lease period ends. By the time the lease option expired, the real estate market should have increased the value of the home. If the value of the home didn’t increate, the optionee can just walk away from the deal, and you, the optioner, can repeat the process with somebody else. In the meantime, you got your mortgage payments covered, and then some. This technique yields higher returns that a straigh lease or rent.
We will discuss the sandwich lease option on the next post, coming soon…