Home ownership has long been a hallmark of the American dream, but that dream has lately changed a little. Find out what’s motivating would-be buyers to become steadfast renters and learn about the pros and cons of renting.
Homeownership has declined…but why?
The percentage of households headed by homeowners took a dive in recent years, falling to the lowest level in two decades. It’s easy to pin this drop on the housing bust and the steady string of foreclosures taking place across the country, or even on the new credit restrictions issued by mortgage lenders, but that’s only part of the story.
The truth is a lot of people are choosing not to become homeowners.
Rent: no longer a four-letter word
Being a renter these days is no longer viewed as a stepping-stone to home ownership. It’s now widely considered an attractive and affordable option, both for those individuals forced into the situation because of foreclosures and for those who actively choose that lifestyle.
Because of the new popularity of renting, several renter assistance associations are showing booms in business. Online rental search services are seeing an explosion in interest and so many renters are coming through that it’s increasingly hard to match properties to the right people.
More importantly, the demographic data for the new wave of renters is absolutely varied. Whereas renters by and large used to be young adults who did not yet have the savings for a new home, they now tend to be people of all ages. Some are turning to rent because it’s the most affordable, practical option, while others are deciding to rent because they’re financially strapped and have virtually no other choice.
The challenge of renting with a low credit score
For anybody forced into a rental situation, the going is pretty rough. This isn’t at all related to actually having to live in a rented property. It’s actually got to do with being approved to rent a property in the first place.
As mentioned, loads of people are being forced into rental situations because of foreclosures, but many are also finding they’re no longer approved as renters. The problem is that foreclosures tend to hurt a person’s credit score by a substantial amount.
When these individuals try to rent a place to live, their low credit scores are holding them back from approval. Because of the mass string of foreclosures around the country, landlords are increasingly likely to reject renters with bad credit scores. This leaves people in a bind if they’ve faced a foreclosure and are in need of a place to live.
Playing the convincing game
There’s only one good solution for renters with low credit scores who are looking for somewhere to rent but can’t get approved. They have to convince the potential landlord that they’re a good choice for renting. Depending on the landlord, this can be easy or tricky to do.
One potential avenue to convincing a landlord you’ve got the integrity to rent is to demonstrate your character. Having colleagues and friends write letters of recommendation is one option, or you can give out those individuals’ phone numbers (with permission) and request that your potential landlord give them a call to interview them about your character.
Other options include showing the landlord your paycheck stubs to prove you’ve been at a job for a specific period of time. You might also show your bank account statement – that is, if you’ve got a decent amount of money available
Do what’s right for your individual lifestyle
Renting can be a stress-free endeavor if you go about it in the right way. It’s also an attractive option if you’ve got a lot of other things on your plate, such as a young family or full-time enrollment in a university. Renting is also a great choice if you’re stretched thin financially or carry substantial consumer debt.
On the other hand, if your finances are in good shape and you know you’re going to be staying in the same area for at least five years, owning a home can still be a great option. Take the time to carefully consider this decision. If you determine buying a home to still be your dream, go for it – especially while it’s a buyer’s market!
Just remember – if you’re still looking forward to a stress free lifestyle, renting can be an easy and rewarding choice.
