Should You Lease a Home?
There are different paths available when it comes to the prospects of home ownership and they all vary. The different paths traveled are all reliant on different factors such as credit, being able to pay the down payment or getting approved for a mortgage loan.
One thing that is common in the list of factors present on the paths is the fact that they all have to deal with money. For individuals that have issues with getting a home due to things like lack of suitable credit or unapproved mortgage loans.
A good option when seeking a home is to try the lease approach which does not have a lot of hassle. In the case of leasing a home, individuals have a lot of options if a favorable understanding is worked upon in the lease purchase agreement. The lease approach to a home has its pros and cons which are:
- The lease purchase agreement is favorable to those who do not have credit and savings that are needed for a more conventional purchase arrangement.
- Most times, lease purchase agreement has a clause of renting with the added option of buying later.
- There is usually a long time frame for the payment of the lease agreement.
- The period of the lease purchase can help to boost credit rating.
- Even if the property increases in value during the period of the lease, the landlord is still tied down to the agreement in the contract.
- Some lease agreements are easy to get out of especially if the home in question experiences a drop in its value. This is so because there will be no force used to ensure that the lessee has to exercise the right to buy so at the end of the day, other property options can be looked into.
- The real estate market and the personality of the homeowner all factor into how much is requested for in the lease agreement. This would be higher than rental payments.
- Leases are usually paid monthly and failure to pay a month’s agreement can lead to a penalty of extra money being paid.
- If the option of buying at the end of the lease period is considered, a mortgage still has to be qualified for to exercise the right.
- The homeowner is usually not required to return the money to you if you don’t exercise your right to buy the property.
- The lease agreement is affected by the housing market trend meaning it fluctuates on a constant basis so being tied onto one is a gamble as the homeowner is likely to want the lease agreement to reflect the current market trend.
- The agreement is binding on both the lessor and lessee so if the home ends up being less than the forecast amount, then one party gains while the other loses.
- Market forces might make it difficult to get a mortgage for the price on the contract.