From Casey Fleming to your financial hustle and bustle, whether it’s renting or owning your home already has more than any of us. At the heart of this dilemma is that when you buy a house, your housing costs will increase every month, at least for the first few years. On the other hand, you will establish fairness. Then there is the whole business of qualifying for a mortgage. Leasing may be easier, just to avoid the hassle of a down payment, a credit check, etc.
But things are changing.
Why might owners be more cautious than lenders?
Lenders provide loans but do not keep loans in almost all cases. Instead, they immediately sold the loans to fannie mae, Freddie MAC or Wall Street hedge funds. They usually will continue to provide service for your loan, which means that they will charge a monthly payment and response to you may have any customer service requirements, but if you default or be payment problem, they did not actually get hurt; They only need to do some extra work and can charge you in many cases. In other words, if you don’t pay, it may be a small pain, but it won’t cost them. (maybe even make a little money.)
However, the landlord is stuck with you. If you become a recipient, you are his or her problem, and you don’t pay monthly payments directly against your landlord’s bank account. Therefore, landlords always have to pay attention to their own credibility. On the other hand, vacant apartments are a cost that can never be repossessed, so traditional landlords have to be flexible in order to balance the demand for vacant flats.
Competition is making it more difficult to rent than to buy.
In cities such as Seattle, San Francisco and Boston, where demand is strong, landlords find themselves in a very good position. According to a recent study by RentCafe.com, an apartment listing service, they can choose tenants from a group of applicants, resulting in rising credit standards in these cities. By debt-to-income ratios, income standards are tightening and margin requirements are increasing.
At the same time, the credit standards – at least as measured by credit scores – remains the same, or indeed for buyers become more easy, because of the HUD, fannie mae and Freddie MAC, work hard to get more buyers can afford to buy houses. Prepayment requirements are still low, and the debt-to-income ratio of up to 50% of gross income is regularly accepted.
What kind of differences are we talking about?
, according to the study of tenants in San Francisco to accept the average credit score is 724, but was rejected the average credit score is 611. The Boston even tougher, acceptable to an average score is 737, the average is divided into 667 rejected the tenant.
Compare this with what you need to buy a house. The fha loan allowed credit scores to be low to 580, down to 3.5%, while fannie mae and Freddie MAC needed only a 3% drop, but credit standards were slightly higher. You need a credit score of at least 620 to get the loan that is ultimately sold to them.
Do you want to rent or buy? If you live in a city with high rents, you may not have a choice. Of course, you can live in mom and dad’s basement, but if your decision is to rent or buy, then the calculus changes.
Renting or purchasing decisions is still not automatic.
When you buy a house, your monthly payment time is almost always better than your monthly rent payment is high, but if you choose to rent houses, you may need to have a better credit ratings, more cash to enter your house, the obligation of every month. And, you may not even be accepted by the apartment, in which case you need to find a different city.
Another reason to buy a house.