As a renter, you find out if you’re at risk for the “renter’s trap” every time you have to renew your lease. The costs of things that your landlord or management company provide has increased and, as a result, your rent needs to increase to continue to cover these costs. Sometimes (depending on where you live) the cost of renting will increase because the market is so strong, which means that management is able to ask for more because if you don’t pay it, someone else will.
While annoying and unfortunate, both of these rent increase reasons make sense and are a part of life as a renter. The problem comes when the cost of everything around you increases while your income remains the same.
The “renter’s trap” occurs when you end up spending the money you’d like to save for a down payment on rent and other expenses, which forces you to continue renting. The result is a diminished savings account and more time than expected spent renting rather than owning.
It sounds like an easy trap to avoid, but due to a lack of knowledge about alternative loan programs, many people think that they have to continue renting because they can’t afford to buy a home. Thankfully, the days of the 20 percent down payment requirement are gone, and there are many loan programs available that let home buyers put considerably less down, depending on a variety of factors, including income, military involvement, whether you’re a first-time home buyer, and the type of home you want to purchase.
Read the Full Article: Are You Stuck in the Renter’s Trap?
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Trish and Tanis