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Thinking About Leasing?
Depending on your personal circumstances, leasing a home may actually end up being a much better alternative option for you than buying one. There are a handful of advantages that come from leasing rather than becoming a homeowner, all centering around finances and freedom.
Before you make the choice to lease or buy, it is often best to investigate the advantages and disadvantages of leasing.
Smaller Financial Investment
- First and foremost, leasing a home requires only a security deposit and first and last month’s rent, depending on the lease agreement.
- It’s usually way less money to enter into a lease agreement than it is to purchase a home, because buying generally requires a substantial down payment.
- Leasing a home does not require securing a home loan — you only need to be approved by the landlord.
- Leasing will not add to your debt burden like a home mortgage loan does.
- You will avoid the accumulated costs of owning a home, such as property taxes, homeowner’s insurance and interest on the mortgage
Minimal Repairs and Maintenance
Your budget will be more predictable when leasing a home, loft, or studio because you are not responsible for the upkeep, maintenance and repairs. As a tenant, you will pay rent and some or all of the utilities, depending on the lease agreement. Unless you or your guests cause damage to the property, your landlord must pay for repairs and replacements when things aren’t working.
From broken appliances to pest infestations, the cost of home upkeep is meant for homeowners, not tenants. Even tasks like lawn care and appliance tune-ups belong to the landlord. Your lease agreement will generally outline exactly what maintenance should be done by tenants and what is the landlord’s responsibility.
Leases Give You More Flexibility
A lease agreement is typically set for 12 months, giving you the chance to move out when the term is up. To end your lease agreement, you just simply need to notify your landlord in writing with enough advance notice. You’ll even be eligible for a refund of your security deposit, assuming there are no damages to the property.
To move out of a house, the homeowners must put it up for sale. The speed and movement at which a house sells is affected by the housing market, as well as the sales price. The house may not sell, or it may sell for much less than it is worth, depending on the economic conditions and the home’s marketability. Leasing a home gives you the opportunity to come and go as needed.
No Loss of Equity or Property Value With Leases
Finally, when you lease a home, you won’t have to worry about the value of the property going up and down due to the housing market. A home can be a great investment if the value of the property goes up after you’ve purchased it, creating equity. When the property’s value decreases, you lose equity.
Tenants who lease homes avoid fluctuations in real estate and neither gain nor lose. If you’re planning on staying in an area for less than five years, it’s generally not a wise idea to invest in a home because it will be a while before you can make any gains.