Tuesday, February 6, 2007

Lease Options - An Alternative to Selling & Personal Savings Declines aka, All the News That's Fit To Print

Several news articles struck me today. They are only somewhat related, but I'm posting them both anyway. The first one is another sledge hammer to personal savings. Reuters and CNN is reporting that personal savings in the United States has fallen to a -1%, the lowest reported since 1933, during the Great Depression. That is a stark figure. They are also talking about Sub Prime Loan defaults increasing in numbers. Sub prime loans are loans given to people who may have credit issues, for example, and do not qualify for prime lending loans; they usually involve higher interest rates. The number of sub-prime loans defaulting has been increasing year by year. The personal savings statistic was very sobering and should be a wake up call to all of us. An article from CNN Money talks about manufacturing coming out of it's slump which would be good news.

The other article is from the National Association of Realtors (NAR) on line magazine. In the Cleveland market there are a lot of homes competing with each other for buyers. This article talks about an option for sellers, and that is to allow your home to become a Lease with an Option to Purchase. One reason this becomes attractive to me is if you are selling your home very soon after you have purchased it. Maybe you are moving out of state for job purposes; an unexpected transfer that makes you think you have to put your home on the market even though you just purchased it. We just 'closed' a lease agreement on a rental for a home in just this situation. It's very hard to recoup your expenses in a short period of time so maybe selling a home is not the best idea, why not put it up for rent or a Lease with an Option to Buy ? Single family home rentals are very marketable and this can be a win-win scenario for both the homeowner (landlord) and the tenant. This allows you to wait a bit longer before putting the home on the market for sale, allowing more time for the home to increase in value. It can also give you time to make some improvements that will increase your homes value, all the while making your mortgage payment through the monthly rental amounts. It's worth considering.
Peace Out - 3C

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