does having an unbreakable lease affect mortgage qualification

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financeguy_IHB

New member
I'm not eager to buy right now, but will consider it if the right place pops up at the right price. Therefore i got a prequalified approval letter for a mortgage in case I find something. When I prequalified I was living at home. Now I want to get my own place but am worried that if I sign a lease it will affect my mortgage qualification. I'm pretty sure I can find someone to take over the lease since I will be getting the place at a discount, but am worried that the banks will penalize me for having a lease. Is this the case? If they will penalize me, can I just state that I don't have a lease?
 
You can always have a "Lease Break" fee added to your lease.

The Irvine Company includes it in their lease.



I believe our Break Fee was the equivalent to one month's rent.

Every lease is different, but it is also can be a negotiating

factor with your landlord. However, if you deal with

The Irvine Company, you may not be able to negotiate it as

easily than with a residential landlord or another

Leasing Company.



Good luck!
 
[quote author="financeguy" date=1224980993]I'm not eager to buy right now, but will consider it if the right place pops up at the right price. Therefore i got a prequalified approval letter for a mortgage in case I find something. When I prequalified I was living at home. Now I want to get my own place but am worried that if I sign a lease it will affect my mortgage qualification. I'm pretty sure I can find someone to take over the lease since I will be getting the place at a discount, but am worried that the banks will penalize me for having a lease. Is this the case? If they will penalize me, can I just state that I don't have a lease?</blockquote>
I wouldn't lie on the application.

Banks have the authority to view all your financial records.

They can (and most likely will) review your checking account and credit card history.



I don't work in the banking industry, but this is from

my experience when we purchased a home back in 1993.

The bank went through our finances in detail, and asked a million questions.

I'm sure these times will be coming back (thankfully).
 
But it's not with the Irvine Company, and even some Irvine Company rentals like Turtle Ridge don't have lease breaks. I'm not so concerned about breaking the lease or finding someone to take it over, as I am about it affecting my mortgage qualification. If I got the max qualificaiton before, will a lease reduce my qualification? How do banks look at leases?
 
[quote author="financeguy" date=1224981878]But it's not with the Irvine Company, and even some Irvine Company rentals like Turtle Ridge don't have lease breaks. I'm not so concerned about breaking the lease or finding someone to take it over, as I am about it affecting my mortgage qualification. If I got the max qualificaiton before, will a lease reduce my qualification? How do banks look at leases?</blockquote>
Wow, I didn't realize Turtle Ridge Apartment Complex didn't have lease breaks any more.

That's where we used to live.

Interesting.
 
This is just my guess.... but whenever I have used a mortgage calculator, it will usually ask you to state your debt, but long-term, not short-term. I don't know the exact number of months but usually it qualifies as short-term debt if it will be paid off within a year. In this case I would look at your rent obligations as the "debt" and it being short-term since your lease would most certainly be up within that year. Therefore I think it would have little to no bearing on how much you have already pre-qualified for. Does that make sense?
 
[quote author="financeguy" date=1224981878]But it's not with the Irvine Company, and even some Irvine Company rentals like Turtle Ridge don't have lease breaks. I'm not so concerned about breaking the lease or finding someone to take it over, as I am about it affecting my mortgage qualification. If I got the max qualificaiton before, will a lease reduce my qualification? How do banks look at leases?</blockquote>


You can always break a lease. You break the lease, you pay a fee. It will not affect your qualifying for a mortgage if you no longer have the lease payment. Banks look at leases as if you will end it by the time your loan closes, whether you broke the lease or the lease ends.
 
[quote author="financeguy" date=1224981878]But it's not with the Irvine Company, and even some Irvine Company rentals like Turtle Ridge don't have lease breaks. I'm not so concerned about breaking the lease or finding someone to take it over, as I am about it affecting my mortgage qualification. If I got the max qualificaiton before, will a lease reduce my qualification? How do banks look at leases?</blockquote>
I'm sure someone with lending experience will answer your question on Monday.

The weekend is usually slow in the forums.
 
[quote author="CalGal" date=1224982647][quote author="financeguy" date=1224981878]But it's not with the Irvine Company, and even some Irvine Company rentals like Turtle Ridge don't have lease breaks. I'm not so concerned about breaking the lease or finding someone to take it over, as I am about it affecting my mortgage qualification. If I got the max qualificaiton before, will a lease reduce my qualification? How do banks look at leases?</blockquote>
I'm sure someone with lending experience will answer your question on Monday.

The weekend is usually slow in the forums.</blockquote>


Actually, he just did. See above. ;-)
 
[quote author="graphrix" date=1224982871][quote author="CalGal" date=1224982647][quote author="financeguy" date=1224981878]But it's not with the Irvine Company, and even some Irvine Company rentals like Turtle Ridge don't have lease breaks. I'm not so concerned about breaking the lease or finding someone to take it over, as I am about it affecting my mortgage qualification. If I got the max qualificaiton before, will a lease reduce my qualification? How do banks look at leases?</blockquote>
I'm sure someone with lending experience will answer your question on Monday.

The weekend is usually slow in the forums.</blockquote>


Actually, he just did. See above. ;-)</blockquote>
I think we were typing at the same time. :)
 
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