Lease Option Agreement

[Alejandra Macias]

My husband and I came across an excellent opportunity to purchase a single-family house which would be our primary residence, of course, we will do some house hacking. We currently don't have the best credit to qualify for a $250,000 mortgage. My generous and loving mother offered to do a lease option for two years, and at the end of two years, she would sell us the house for $50,000 more as her profit. She and her husband have excellent credit together. She asked, how would they earn the $50,000 in two years if the house would not be entirely paid off. I was not sure how to answer that question. Would someone be so kind some shed some light on this, and inform me more about a lease-option? Thank you!

Details:

Purchase Price: $250,000

Downpayment: $10,000

[Nathan Gesner]

So you would buy the house for $300,000 after two years? It's unlikely to appreciate that much in such a short period of time. Personally, I think we'll see the market stagnate or drop due to all the "free" money being thrown around for COVID.

I also don't like the idea of mixing family and business unless all parties are extremely honest and reliable. You would be better off in the long run if you just sacrificed, saved up, and made it of your own accord. You're more likely to appreciate it and to learn some skills along the way that will increase your odds of success as you invest.

[Nick W. Graham]

@Alejandra Macias. Lease options can be quirky and should be drafted by a real estate attorney. From title insurance to acceleration clauses in the mortgage, seek legal counsel before proceeding.

[Filipe Pereira]

This may be loving, but a 50K profit off of a daughter's back doesn't sound very generous if you ask me...I would walk away from this "opportunity" because I can quickly run out of fingers and toes on how this "deal" could go south. I'm with Nathan on this. Buckle down, save more, spend less and do it when your credit is right. Trust me, it will feel a lot better that way as well!