Terminating a lease early to purchase a home – when does it make sense?

For many, purchasing a home may feel out of reach due to current lease obligations. While there are some associated costs and other factors to consider, choosing to terminate your lease early to purchase a home may prove beneficial under certain circumstances. Here’s when it may be a good idea:

You’re in a strong financial position

Can you comfortably afford the downpayment, closing costs, and monthly mortgage payments without stretching your budget too thin? Do the benefits of purchasing a home, such as building equity or avoiding rising home prices outweigh the cost of breaking your lease? If you can answer yes to both of these questions, then breaking your lease early to purchase a home may make sense. If you’re unsure, consider finding a loan officer to have a no-obligation discussion.

You may be surprised to learn that mortgage payments are often the same or less than monthly rent payments. Use our mortgage calculator to estimate what your monthly mortgage payment might be.

Market conditions are favorable

If mortgage rates are at a level that you’re comfortable with and they’re expected to rise before your lease ends, then purchasing a home now may save you thousands over the life of the loan. As rates increase, affordability decreases, so buying in a lower-interest-rate environment can help you secure a higher-priced home. Additionally, purchasing in a “buyers market” may prove beneficial as there is typically less competition giving you more negotiating power.

Are you curious about what interest rate you might qualify for? Request a free no-obligation rate quote.

You’re seeking long-term stability

If you’re planning to live in the same area for the foreseeable future, buying a home may be more cost-effective than continuing to rent. Instead of paying rent, buying a home allows you to invest in an appreciating asset. The equity you build in your home can be leveraged down the road to help fund other goals.

Personal factors and alignment with your lifestyle

Money aside, it’s important to consider the emotional and personal benefits of homeownership such as space, customization, and stability. Is your family growing? Are you working remotely and need space for a home office? Looking to host your family holiday gatherings? Owning a home typically means having more space for kids, pets, work, and hobbies.

Set yourself up for success

Before terminating your lease, do these things first to help ensure a seamless transition into homeownership:

• Review your lease terms: Check for early termination clauses or subletting options.

• Negotiate with your Landlord: Some landlords may be flexible, especially if they can find a new tenant quickly.

• Estimate costs: Factor in termination fees, moving expenses, and homebuying costs.

• Consult a Real Estate and Mortgage Professional: They can help you evaluate your market and determine if purchasing now is a wise move.

Ready to make a move? Find a Summit Loan Officer to get started today!