The Rental Trap – Don’t Let It Get You
One of the top benefits of home ownership is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.
The Rental Trap – Don’t Get Caught
Jonathan Smoke, Chief Economist at realtor.com, warns:
“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”
The Joint Center for Housing Studies at Harvard University’s 2015 Report on Rental Housing, reported that 49% of rental households are “cost-burdened”. This means renters spend more than 30% of their income on housing. These households struggle to save for emergencies and unexpected expenses.
It’s Cheaper to Buy a Home Than Rent
Smoke went on to say,
“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”
“While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”
Know Your Options
Perhaps you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:
“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.
It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.”
Many first-time home buyers who believe they need a 20% down payment may be holding themselves back from their dream home. In many cases, a first-time home buyer can save for a 3% down payment in less than two years. Or, they may qualify for down payment assistance programs. You may already be qualified!
Real Estate Bottom Line
Don’t get caught in the rental trap! If you are are interested in buying a home, let’s get together to determine if you could qualify for a mortgage now.
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