Are You Paying Too Much for Rent?

Do you pay more than 30% of your medium income on rent?

Has your rent gone up in the past years?

Over the last several years, more and more Americans have turned to renting over home ownership. There are several reasons why this has happened, and there are a few ways to bring yourself out of renting and into home ownership.

The foreclosure crisis alone pushed homeowners out of their home and into rentals. In addition, there is another group who are renting as well, the soon-to-be homeowners.

Rising Rent and Unaffordable Rent

With the high demand of rental properties, many are now noticing their rent rising and in some areas rent has become unaffordable.

By unaffordable, we are talking about the traditional threshold set by RealtyTrac. Conventionally, 30% of your monthly income has been the threshold for affordability. Since the housing crisis, in many cities rent costs more than 30% of the average American’s income.

According to an article published by CNN Money written by Les Christie, “1 in 3 Americans are spending too much on rent”.

“Similar trends are occurring in other cities that are home to large pockets of low-income residents. Renters in Philadelphia, Brooklyn, Baltimore and Miami are paying nearly 50% of their income toward rent, RealtyTrac reported.”

RealtyTrac found that the highest percentage of monthly income spent on rent was found in New York City’s borough of the Bronx according to the same CNN Money article. The typical household spends nearly 66% of their monthly income to rent a 3 bedroom house.

These high rent payments are causing those Americans to spend less on food, health care and savings.

There Is Hope

If you are suffering from high rent payments that are getting more and more draining, there is great news. Whether you are a first-time home buyer or you lost your home to a foreclosure or short sale, please read on.

First Time Home Buyers

The Federal Housing Administration has been helping families and first time buyers get into their homes since the 1930s. They provide a loan that is insured through the government. Due to the government insuring the loan, they have more availability then a traditional mortgage loan.

Two significant advantages to a FHA loan are that you only need 3.5% for a down payment and the loans are known for being easy to qualify for.

For more information on a FHA loan, please check out an article we published called, FHA Loans and Qualifications for First Time Home Buyers.

Hope After Losing Your Home to a Foreclosure or Short Sale

There is a new federal program that can help those who have had a financial hardship qualify for a new home loan. It’s called the Back to Work - Extenuating Circumstances.

Instead of waiting 3 or more years after your hardship, you now only need to wait 12 months. For more information on this loan visit our article, FHA Back to Work Programs Gives Hope to Families.

Don’t let your money and financial security be wasted on rent. If you have any additional questions, or if you are ready to start searching for a house, please call our office. We would be honored to help.