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Lease To Own Formula:
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Lease to own (also called rent-to-own) is a housing arrangement where a tenant rents a property with the option to purchase it at the end of the lease term. Part of the monthly rent may be credited toward the eventual purchase price.
The calculator uses the lease to own formula:
Where:
Explanation: This calculation helps determine the total cost of a lease-to-own agreement, including all rental payments and the final purchase price.
Details: Lease to own arrangements allow potential buyers to build equity while renting, test out a property before committing to purchase, and work on improving their credit score before securing a mortgage.
Tips: Enter the monthly rent amount in dollars, the number of months in the lease term, and the buyout price at the end of the lease. All values must be positive numbers.
Q1: What is typically included in a lease to own agreement?
A: A lease to own agreement typically includes the rental period, monthly rent amount, option fee, purchase price, and terms for applying rent credits toward the purchase.
Q2: How much of the rent is usually credited toward purchase?
A: Typically, 20-25% of the monthly rent is credited toward the purchase price, but this varies by agreement.
Q3: What happens if I decide not to buy at the end of the lease?
A: If you choose not to exercise your purchase option, you forfeit any option fee and rent credits applied toward the purchase.
Q4: Are lease to own agreements legally binding?
A: Yes, lease to own agreements are legally binding contracts that outline the terms and conditions for both the rental period and potential purchase.
Q5: Who is responsible for maintenance in a lease to own agreement?
A: This varies by contract, but typically the tenant is responsible for maintenance and repairs during the rental period.