What's in this article?
You’ve found your dream home and are going through the mortgage process. Everything is moving along smoothly. But wait — what about your rental agreement?
This most likely isn’t the first time you’ve thought about what to do with your lease, but it can bring a lot of stress to buyers who aren’t sure if or how they can legally break a lease to get into their new home as soon as possible.
Fortunately, you have options. While breaking your lease outright often isn’t a legal option without your landlord’s permission, there are ways you can lawfully prepare to exit a lease while you’re working to buy your home.
Should I Break a Lease to Buy a House?
Leasing laws differ depending on where you live, so the consequences and options for breaking your lease will vary. That’s why the first thing you should do when trying to end your lease early is speak with your landlord or property manager.
Dig out your lease agreement to carefully read through the rules and conditions of your lease. The agreement should say what happens if you need to break the lease, and what you must do to exit this agreement.
The terms should outline your options explicitly, but be upfront with your landlord as well and ask for clarification if needed. While it may be possible to legally break your lease to buy a house, you will have to follow your lease agreement and communicate openly to move forward.
Let’s dig into what your legal options entail.
Want more personalized rates?
Get customized rates tailored to your individual mortgage needs.See Today’s Rates
Ways to Legally Break a Lease
What does it mean to “legally” break a lease? Well, we all have the freedom to break a lease and move without notice, but this is not recommended.
Your landlord may decide to take legal action, and you may see a significant drop in your credit score — which will harm your home buying chances.
Consider the following alternative options.
Check Your Agreement for a Home Buying Clause
Your first legal option might be simple, but it’s rare: Does your lease agreement contain a home buying clause? If so, this means you can break your lease early as long as you can provide your landlord with proof and proper notice, as outlined by the lease terms.
However, most leases do not contain this clause. If you read through your agreement and don’t see it, you can ask your landlord about it, but most of the time you will have to find another option to break your lease.
Ask Your Landlord to Switch to a Month-to-Month Lease
The journey to homeownership can be a long process when you factor in house hunting, making offers, and applying for and closing on your mortgage loan. Fortunately, if you’re leasing, this can give you the necessary time to speak with your landlord and adjust your terms.
As soon as you’re seriously considering buying a home, ask if you have the option to switch terms to be monthly rather than yearly. Understand, though, that this may include other adjustments to your rent.
Pay Extra Fees or Months of Rent
If your landlord or property manager is unable to adjust your lease terms to be monthly, they may still be able to adjust the terms in some way. This might include allowing you to provide a month’s notice with a rent payment or additional fee.
Or, you may be able to “buy your way out.” Typically, this might look like paying one to two months of rent and an early termination fee. You also may lose your security deposit.
Sublet Your Apartment or Find a New Tenant
Discuss with your landlord whether subletting your apartment to someone else or finding a new tenant for them are options for relieving you of your lease agreement.
This can result in a greater responsibility for you than you are able to provide, though, so carefully weigh whether this option is viable for you.
Talk to Your Landlord
This point is worth reiterating: Just talk to your landlord or property manager. If you have a good relationship with your landlord or have always been a loyal and reliable tenant, they may decide to help you out and be understanding of your situation.
Is Homeownership Better than Leasing?
While the decision to own a home vs. rent is personal and based on your own life goals and preferences, homeownership may be a better choice for you for the following reasons:
- Privacy, stability, and a sense of community
- Freedom to make updates and remodel as you please
- Ability to build wealth over time*
- Opportunity to live mortgage-free someday
Renting offers flexibility and less responsibility when it comes to needed repairs, but it doesn’t allow for the stability, security, and sense of community many seek from owning a home.
It also often does not allow tenants the ability to paint walls or even drill holes in the walls to hang photos and art. If you are in need of a space that’s truly yours, buying a home may be your next big life move.
Is it Worth it to Break Your Lease?
If you’re considering breaking your lease to get into your new home quickly, you will need to carefully weigh your options.
Read your lease agreement thoroughly, discuss your situation with your landlord, and do your research to make sure breaking your lease will not affect your credit or finances.
Sometimes, tenants find that breaking their lease is more feasible and affordable than expected. And if it’s not, you may decide that waiting until your lease is up is an option that makes more sense overall.
Get Started with a Trusted Mortgage Loan Officer
If you are ready to stop renting and start the homebuying process, your first step is getting in touch with a professional, reputable mortgage loan officer.
The loan officers at home.com by Homefinity will offer the type of respectful, honest support a new borrower needs to find the greatest success.
Call us today to get started.
*The information contained herein is distributed for educational purposes only. Fairway does not guarantee a mortgage loan will result in equity gains or tax advantages. Any potential benefits from homeownership are based on individual factors. Contact your Fairway loan officer for more information regarding your specific situation.