The homes purchase price is established by adding a percentage of appreciation to the current value annually. Huh?
Here’s the example: If the current value of your selected home is $100,000 and the appreciation is 5% and you purchase the home in 12 months, your purchase price will be $105,000. (100,000 X 105%) If you need 24 months to purchase your home, the price will be $110,000 (100,000 X 105% X 105%). Since some homes go up in value more than 10% a year, it is possible to have built in equity from the day you buy! This goes a long way with lenders when it is time to get your own financing. All of your down payment and closing costs may even be covered because of this increase in value. The upfront option payment is usually equal to 3% – 5% of the purchase price or 3 – 5 times the monthly rent of your selected home. This is credited back to you 100% at closing and can be used toward down payment or closing costs. Some sellers are flexible with upfront option payments and some aren’t. Don’t be scared off by this – you’re buying a home! And because you are using this money to buy a home, there are
