Is Holding a Mortgage Preferable Over a Lease?

June 06, 2012 / Russell Legato, Residential Property Analyst

There are some people who believe holding a Mortgage VS. lease has its advantages. Consider the following facts to decide which you prefer. If given a choice, would you prefer to sell a property and hold the mortgage or to lease it out?

Is Holding a Mortgage Preferable Over a Lease?

The traditional course of action for selling a house or commercial property is to find a Realtor to handle the sale for you. He or she will be able to connect you with potential buyers, advise you on how to prepare a property to make it attractive for those buyers and sell it on the open market.

We are, however, still experiencing a somewhat depressed real estate industry. If selling is not an option and you cannot afford to wait longer, you may want to consider leasing until a good buyers comes along. The alternative is to sell at a price way below what it is worth and what you expected to get for it.

One tactic, when a buyer cannot qualify for a loan, is to finance it for them. The details of the contract are negotiated. It is less desirable, since there are possible damages to consider. If you follow this route, it is essential to have a legal contract drawn up, plus to check the references carefully before leasing to an individual.

Some families are living on a reduced income and cannot afford the cost of utilities or other costs associated with living in their home. These families may resort to leasing their home. Then they will rent a cheaper property for themselves until the time comes when they can either move back in to the home or sell it.

What if a tenant to whom you lease a home, is either behind in the rent or damages the home beyond the normal wear that is always expected? You may be interested in one contract called a lease with the option to buy. It may be a less appealing option, yet better than having an empty property.

Consider all possibilities other than selling and you have a lease, lease with optional purchase, which is called a land contract or leaving the property vacant. The vacancy option is the least attractive. When a house is empty, it is possible it may attract vagrants or damage to the exterior. In some municipalities there is an ordinance that charges a fee for owning an empty property.

Fortunately, the housing market shows strong indications of improving.

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