More and more people have turned to leasing rather than purchasing homes because of the uncertainty associated with the housing market. Even though interest rates are at historical lows, the ability to obtain credit from a lender has become more difficult. Many lenders are requiring large down payments and very high credit scores in order to even consider lending to a borrower.
Many potential homeowners have turned to creative financing techniques such as lease purchases or using promissory notes to acquire homes, but for many, the options available for home ownership are limited. This has led to the dramatic increase of people leasing homes.
In the past, many people have been slow to embrace leasing because they felt it was a waste of money that could be better spent paying their own home mortgage on a monthly basis instead of their landlords. This argument against leasing has been largely neutralized by the current difficulties associated with obtaining a mortgage. Many people still have a fundamental misunderstanding of the value of leasing a home or property because they don't fully appreciate all of the benefits associated with the practice.
A lease agreement is a contract between a landlord and the tenant much in the same manner as a homeowner is beholding to the mortgage lender as their landlord. If either the tenant or the homeowner is unable to make their monthly payment, the results are inevitably the same. Whether the lease is a long-term contract or a month-to-month lease, the lessee maintains certain rights that are similar to a homeowner's.
A long-term lease agreement grants the lessee full rights to the property short of making major changes to the actual structure of the building without prior permission. The lessee has all the rights and privileges of the property as long as the lease agreement remains in effect and the monthly payments stay current; much like the homeowner.
There are benefits to leasing that can actually outweigh the advantages of owning a home. Many people are more mobile in today's society than in previous generations. An expanding global economy predicates the need for employees to constantly travel and relocate in order to stay relevant to current market trends. This means that static home ownership is not a viable option for many people because buying and selling homes in the short term can lead to tax issues as well as potential losses of equity. There is also the possibility that a downtrend in the market might make it difficult to sell the home when needed.
Another benefit of leasing is that people can get a good sense of a neighborhood and community prior to committing to purchasing a home. This can go a long way toward avoiding buyer’s remorse if the community turns out to be an improper fit for the individuals. Unlike the homeowner, these individuals can simply finish their lease and move on to the next place. But should the individuals find that they want to stay in that community and they enjoy the home they are living in, there are ways to purchase the home through lease options or purchases that are similar to traditional mortgages and offer benefits to the lessee as well as the landlord.
People who do choose to lease can enjoy benefits from leasing that are not available to a homeowner. A lease agreement gives the tenant the rights to the property but it holds the landlord responsible for maintaining the most important and costly aspects of it.
The landlord must ensure that all appliances, plumbing, sanitation, heating, and cooling devices are in proper working order, and if they are not, it is the landlord's duty to remedy the situation. Unlike the homeowner that must deal with the broken water pipe on their own, the lessee simply picks up the phone and calls the landlord to handle it. This is a very valuable aspect of leasing for many people who are not fully committed to the responsibilities of homeownership.
There are other financial benefits to leasing as well. The landlord is responsible for the payment of all taxes and insurance payments on the home as well as any association dues or gardening services. Of course, the landlord can pass these costs onto the lessee in the monthly rent payments, but these obligations can also be negotiated prior to signing the lease agreement.
Even if there is something written into the lease that becomes problematic for either party, a lease amendment can be added to the lease that legally changes the lease structure to remedy the problem. This type of fluid remedy is not available to homeowners with their mortgage.
While many people aspire to the dream of homeownership, many others realize the personal benefits and advantages to leasing rather than purchasing. Individual needs and preferences will be the determining factor for leasing or buying, but the fact that leasing has many different advantages for the lessee over purchasing in certain situations means it must be considered as a legitimate alternative. Today, leasing is much more than simply paying the landlord's mortgage.