Have you heard of leased land, but are uncertain what it is? Have you come across homes in Huntington Beach, Newport Beach or Costa Mesa that have a lease fee in addition to the home price? If you’re wondering what lease land is, you’ve come to the right place.
When most people think of buying a home, they usually expect to own the land underneath the home as well as the building on it.
This type of ownership is known as fee simple. This is also called freehold and is drastically different from leasehold.
In a leasehold or leased land, the owner of the land is different from the owner of the building, and the owner of the building or home pays rent to the land owner.
It can be more difficult to obtain a loan on a home that is on leased land than fee simple land. The lender will want to be certain that the current lease period does not run until several years after the loan is due to be paid off. So if you want a 30 year loan, you might need to have 35 years left on the lease.
Additionally, you may find that many lenders do not offer loans on leased land and may charge higher fees or interest rates to give loans on homes that are on leased land.
Further, because the land is not included in the purchase, the value of homes on leased land is typically significantly less than similar homes in the vicinity which are fee simple.
One of the benefits to leased land is that you may be able to buy a nicer home for the same amount of money. However, when considering this, be sure to add the cost of the lease into your payments.
If you have any questions about lease land in Huntington Beach, Newport Beach, Costa Mesa or other areas of Orange County or if you would like to be put in touch with lenders who can help you to obtain a loan on lease land, please contact Christine Donovan at 714.319.9751.