Renting During Recession

Because of recession, one of the smartest financial moves right now is to purchase a property. Lenders around the country are aggressively selling properties today because foreclosed properties are increasing considerably.

With the value of the property still going down, they have to sell the property as soon as possible or else they might lose a considerable amount in their real estate business.

But even with the current condition, there are still consumers that opted to rent instead of buying. The idea may sound a little crazy since you now have a chance of owning a property in the lowest amount possible but you opted to rent.

At first, the idea of renting a property looks bad. But if you take a closer look at it, there are some strong arguments why you need to rent today instead of purchasing a property.

In this article, we take a look at why some individuals are opting to rent instead of purchasing a property. Some even sold their property and opted to rent.

Lower Rent vs. Lowered Mortgage

It’s already a known fact that mortgage rates today are a lot lower together with the low priced properties. But it is also a known fact that the rent rates today are even a lot lower.

It is just a chain reaction since properties are going down in value, the property owners will eventually lower their rent to keep up with the market.

Some would argue that the difference in mortgage and rent is not that much that makes renting a bad idea. But if you are living in a posh location, where the mortgage could still reach $5,000 a month, you will be able to rent a property within the same location with less than $4,000 a month. The $1,000 difference per month is just too large to be ignored.

The Crazy Mortgage Process

Because of recession, banks and other lending institutions are very careful in approving mortgage applications. While it is true that the interest rate in mortgage loan is one of the lowest in recent years, it does not mean that everyone can just go to the bank and ask for a mortgage loan.

Consumers that are doing really well with good credit standing can’t even be approved for a mortgage loan easily. Just imagine the difficulty for those who are in bad credit standing.

Unless you can come up with a down payment, a good credit rating and a stable job, you cannot be approved for mortgage loan.

On the other hand, renting is a lot easier since you don’t have to take out a mortgage loan just to live the property.

As long as you can show that you have a good source of income and would be able to pay the rent on time, it doesn’t matter if you are on a bad credit. Although there are landlords that will check your credit worthiness, this practice is very rare.

When to Rent, When to Purchase

If you are confused on when to rent or when to purchase, here are some questions you need to ask yourself:

Are you planning to stay in the property for a very long time or even for the rest of your life? 
If the answer is yes, then it’s smarter to purchase the property. You don’t want to end up paying rent even though you’re already retiring.

Are you saving for something?
If the answer is yes, then you have to opt on renting. The difference is just too much to ignore. Just make sure that your savings will result to something better.

There is a strong argument to rent. Think about this option before you purchase a property.