Rent to Own Home Terms
Lease Option/Purchase Option – Normally stipulates the tenant/buyer’s right to purchase the home for a specified amount at the end of the lease period. This stipulation usually has a fee attached referred as the Option Fee.
Option Fee – Fee paid that gives the tenant/buyer the right to purchase the home before a specified date. The option fee is paid at the beginning to the rental period and is generally non-refundable. In some cases the fee may be used as additional money to be paid towards the purchase price of the home. The option fee is not to be confused with a rental security deposit.
Monthly Rental Credit – A portion of the tenant/buyer’s monthly rental payment can towards a down payment for the home at the time of purchase. This amount varies, but can be as high as 50% of the monthly payment. It is important to note that if the purchase option is not exercised the seller retains the credit in most cases.
Rental Period – This refers to the time period in which the tenant/buyer will rent or lease the home until they have the option to exercise the purchase option.