What's the Difference Between a Lease Option and a Land Contract?

     A Lease Option is where you pay a non-refundable deposit, and make payments on a piece of property for a few years with an option to buy. Whether any of this money goes into buying of the house is negotiable and you should consult with an attorney before signing any kind of agreement such as this.

     A Land Contract is sort of a layaway installment plan for buying a home. You move in, make payments, etc., but the lender holds the title until you fulfill a certain amount of equity in the home. This can be anywhere from 20% all the way to 100% equity.

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