"I am attracted by the idea of buying a house under a lease-to-own plan, but am frightened by reports of scams. Should I be?" Frightened, no; careful, yes. Any kind of financial contract can be structured in such a way that all the benefits flow to one of the parties and none to the other. Lease-to-own (LTO) plans are hardly unique in that regard. But LTO plans have a solid economic rationale, which means that they can be structured so that both parties benefit. LTO Contract Features: An LTO is a lease combined with an option to purchase the property within a specified period, usually three years or less, at an agreed-upon price. The borrower pays an option fee, 1 percent to 5 percent of the price, which is credited to the purchase price. The borrower pays rent and an additional rent p...
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