This is a prime time for renters to reflect, take stock, and prep for the year ahead. If you’re currently renting but would rather be owning, your new year’s plan might involve breaking the rent cycle — and you’re not the only one.
Nearly 75% of renters have a 5-year plan to buy
Renters don’t want to keep renting forever. Up to 74 percent of renters plan to buy a house within the next five years, according to the latest 2018 Bank of America Homebuyer Insights Report. Thirty-eight percent of renters plan to buy a home within the next two years.
These renters were also asked what they disliked about renting. Here’s what they said:
- Rising rental costs – 52 percent
- Feeling of throwing money away – 49 percent
- Missing out on building home equity – 46 percent
- Not having the feeling of home – 43 percent
- Rents potentially rising every year – 42 percent
- Paying their landlord’s mortgage – 32 percent
- Not being allowed to keep pets – 20 percent
It’s not a surprise to see rising rents at the top of the list. In the last 30 years, the median asking price for rent has risen significantly. It’s been climbing since 1988.
Say goodbye to rent and say hello to an affordable mortgage. Get in touch with a local loan officer at a click.
There’s a general rule of thumb that you shouldn’t spend more than 28 percent of your income on housing. But close to half of all renters surveyed, or 48 percent, are spending more than this. With rents expected to rise again soon, there’s no reason to stay locked in the rent cycle for another year.
Renters were also asked why they hadn’t bought a house yet. The top response given by 44 percent of renters was that they hadn’t saved enough for a down payment. Almost half of all renters still believe that a 20-percent down payment is required to buy.
Clearing up this common mortgage misconception can make a big difference. A 20-percent down payment is no longer the industry norm, and there are also plenty of low- and no-down-payment mortgage programs and down payment assistance options that can open the door for renters by minimizing or cutting this cost completely. In short, many more renters should be able to buy.
How to turn your rent into a mortgage
Most renters are tired of the unpredictability of rising rents. There’s an easy way to break this cycle, and you don’t have to do it alone. You don’t even have to input your information into an anonymous form that can’t guide you into making an important decision. Get personalized help for your unique situation by connecting with a local loan officer instead.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.