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You have been a renter and are looking to buy but you can not get into a mortgage on your own. So as you are out looking at houses you come across the dream home that is available via a lease purchase.

My advice, run away. The rules of the game are set up so that you have some significant hoops up to jump through to buy the home, and if you miss any of them, the extra money you are paying is lost to the landlord.

If you are serious about buying a home, spend the time that  you would have rented a lease purchase and save hard, clean up your credit report, and focus on the opportunity. By buying into the opportunity for a lease purchase you are limiting your opportunities to one home and putting yourself into a relationship that could end up setting you further behind in your attempts to become a homeowner.

This is when you need to be very careful as there are  landlords that look for people like you to increase their earnings on the home. They look for a “renter with steady income who lacks the down payment and qualification for a mortgage. Landlords sign them up with an option to buy the property — at a cost of as much as $10,000 up front, plus $300 more than fair market value each month. That extra money is supposed to go toward a down payment, should they exercise their option to buy. The deal makes a family feel like they are practically buying the house, so it can be very tempting.
The problem? In nearly all cases, the family’s financial situation doesn’t change much after a year or two, so they’re just as unlikely to qualify for a mortgage. What’s more, savvy landlords have a feel for what the house will be worth in a year or two, and they price the optional purchase at a level likely to exceed that worth, making the option to buy a bad decision anyway.” via MSNBC.com.

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