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I am in the process of planning to do a lease-to-own on the house that I currently own and have some questions

1. Will my mortgage company allow me to do this? 2. Can I get less expensive insurance than the full homeowners insurance that I have now as long as I require the tenant to get renter's insurance? Thanks.

Public Comments

1. 1.) you may have to refinance. They will not allow the "own" part unless they are paid in full. 2.) actually your insurance will increase as you no longer live there and you are insuring investment property. The tenant can not insure the property themselves, only their own person property within it.
2. Mortgage company has no say in whether you rent it out. insurance could go up if you tell your broker its being rented, becuase a renter is more likely to not take care of property. FYI when do a lease with option. Sign a regular lease. and then sign a seperate contract to buy. People with a lease option, cant be evicted, you would have to foreclose on them. if they know their rights.
3. Unless there is a restriction in your mortgage document, they have no say in it. Be aware that you are still required to pay your mortgage just a usual, and that your lease income becomes taxable income. The most important thing is to have an attorney review the lease documents between you and the leasee to insure that it is legal and everything is in writing. Remember if it isn't in writing, it doesn't count. Cheers
4. The mortgage company does not require you to disclose that you are renting the house. Their only concern is that the mortgage is kept in good standing. A lease-to-own deal does not consummate until the new owner actually takes title to the house and pay you your money. There is risk and advantage to this type of deal: In a rising market, the Seller may decide to ask for more money closer to closing time (not good for the buyer); in a falling market, the Buyer may just want the deposit back and out of the deal (not good for the Seller). In a perfect world, markets would never change and/or Buyer & Seller will honour the agreement no matter which way the market is going. Landlords are obligated to provide fire insurance on a rental property, it's recommended to keep liability insurance as well. You should get a rate reduction when you take out the content insurance part and any jewellery/special item riders you have now.