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| Lease-purchase option might be worth a look
ORLANDO, Fla. -- May 3, 2005 -- Fannie Mae, Freddie Mac, housing agencies and nonprofits across the country have teamed up to establish lease-purchase programs that help low- to moderate-income households achieve homeownership.
Under a traditional lease-purchase arrangement, the homebuyer pays a monthly rent that includes funds to be put toward the down payment. In a matter of one to five years, they are given a mortgage and become the owners of the property.
However, under mortgage giants Fannie Mae's and Freddie Mac's programs, the real estate is purchased by a housing authority or nonprofit that holds title to the property until the buyer secures the mortgage. Traditional lease-purchase agreements are formulated by the landlord and the buyer, and most must be ironed out by the courts because they fail to include necessary details and contingencies. Fannie and Freddie, which are government-sponsored enterprises, hope to avoid that by explaining all of the terms in detail; and the borrower often receives an education as well as a cleaner credit record.
Once the renter becomes the homeowner, the interest paid each month is tax deductible.
Source: Orlando Sentinel (FL) (05/01/05) P. J14; DeBoth, Jim
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