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What is an option-to-purchase agreement?

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Quick Answer

An option-to-purchase agreement lets renters pay a fee for the right to purchase the property in the future. In the case of a rental house, the owners often set aside this fee and apply it to the downpayment if the renters choose to purchase the home, according to Bankrate.

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Full Answer

An option-to-purchase agreement locks in the sale price and gives renters a chance to rehabilitate their credit while they live in the house they wish to purchase. The agreements are typically only a good investment for renters who are certain they can qualify for a mortgage when the option period ends, states Bankrate.

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