General Question

tekn0lust's avatar

Is there any practical difference between leasing a house and renting a house?

Asked by tekn0lust (1861points) February 26th, 2008
Observing members: 0 Composing members: 0

3 Answers

artemisdivine's avatar

Leasing to own is almost like renting but it’s usually a much longer term. With renting, you sign a retal contract for a specific time and if you don’t like it, at the end of your term, you leave. With leasing, you are usually locked into a longer term and can’t just walk away without sometype of large penalty. Additionally, some of the payment you make each month goes either towards a down payment or towards the coast of the home. The leasing advantage is usually that you can get in for no cash out of pocket. The drawback is you will most likely lose a substantial amount of your “banked” money if you decide to walk away. You may also be responsible for other charges durning your lease to own like taxes, trash and other things. If your outright buying a home, you usually have to come up with sometype of deposit or down payment and at closing, the home is yours. The monthly payments ou make each month go directly into your account to pay for the principal balance, interest and if your bank perfers, taxes and insurance. With all of the financing options in the market today, purchasing a home is the only way to go! Good luck!

Lease option sales were popular financing instruments in the late 1970s and early 1980s. They were primarily used as a way to circumvent alienation clauses in mortgages. Proponents claimed the sale was not really a sale because it was a lease; however, courts argued otherwise.
Today, options to purchase, lease options and lease purchase agreements are three different financing documents. The variances are state specific and not all states have identical laws. Before entering into an agreement with a seller, buyers should obtain the advice of a real estate lawyer. The information below is an overview and is not meant to be construed as legal advice
http://homebuying.about.com/od/financingadvice/qt/091007_leaseopt.htm
What is the difference between a lease-purchase, lease-option and rent-to-own program?
http://atlantahomesforrent.com/html/leap.html

Whether a prospective homeowner should buy now, or wait until they can save for a down payment, depends on many factors. These include the expected rate of house appreciation, the difference in interest rate and mortgage insurance between a no-down payment loan and a loan with a down payment, and the buyer’s tax rate. The sub-prime crisis in 2007 shifted these factors toward waiting.
http://www.mtgprofessor.com/A%20—%20Down%20Payment/buy_now_or_save_first.htm

tekn0lust's avatar

A little more clarification to the original question may draw some more answers.

I have owned two houses. Our starter home was paid off in 9 years and we sold it putting 90% of the equity into our second home which we have owned for 2 years. Now we must move closer to family 400 miles away in the DFW metroplex. We don’t want to just up and buy a new house there preferring instead to rent or lease for a year or so while we decide exactly where it is we want to end up.

In looking I’ve seen about 60/40 rental to leased property and was just curious to the practical aspects of the difference.

Thanks to all!

Charlie's avatar

I understand that a lease is a bit cheaper then a rental BUT either is higher then buying. Still, if the houseing market keeps falling as predicted you could buy cheaper with a better place to live. The problem at the end is if you want to move again, getting rid of that house could be a problem. It is a buyers market right now. Alease is for a given period of time while a rental is uaually month by month. Both usually require a deposit to cover ware and tare and is usually the first and last month of the lease/rental period which, in most cases, you will never get it back no matter what. The problem with renting/leaseing is that it is money gone. You get a place to live but what you pay is gone, no collateral, no equity, just gone.
Hope this helps.

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