Is Your Rent too Damn High? If so, you might be among renters who witnessed a three percent increase in the cost of monthly rent, according to Marketplace, Kai Ryssdal’s podcast. In a segment titled “Rents are rising higher at the lower end of the market,” Ryssdal reported February 19, 2019 that recent rent hikes likely affect those with lower earnings, eventually forcing some into eviction and homelessness.
If you’re contemplating divorce or you’re cohabiting, how does the rental hike effect you? To begin, look at whose income pays the bulk of the rent or the mortgage. Many spouses or partners seeking to separate or divorce want out of their living arrangement as soon as they decide to split. It could be complicated, though, if the one seeking to leave doesn’t have the finances to support rent and there aren’t assets to divide or the one who wants to keep the real estate as their asset can’t qualify to refinance the mortgage in their sole name.
While the impulse of many seeking to separate is to rent an apartment or condo, purchasing a home may be a better option. Mortgage companies and banks will likely consider your credit history, your earnings and your debt to income ratio when reviewing loan applications. Rental companies and leasing agents will at least do a credit check and require you to present proof of income.
Ashley Parker, whose real estate company, Parker & Klein, is in the top 10% of local realty companies, said “If you have the means to get a house and want the security of it,” purchasing real estate could be a good idea. Knowing what you can afford is crucial, Parker said, because “You also don’t want to get stuck in the foreclosure situation.”
Say, for instance, you are the spouse the other spouse buys out of the equity in your marital real estate during your divorce and you can afford the down payment on a new place. That doesn’t necessarily mean you should buy, though. Parker, who is a broker for real estate purchases only, rather than rentals, posed several questions to ask to determine whether renting or buying is your best option:
- What are your long-term goals?
- Where do you want to live?
- Are you staying in the same city for your kids?
- Do you have a secure job with longevity?
- How much spousal support (if any) will you receive to apportion to the house payment?
In many cases, during or after divorce, or moving out after a relationship ends, renting may be the only option due to tight finances on both sides of the equation. In that situation “Knowing the right person to rent from,” can be a life and money saver, Parker said.
In 2016 Louisville’s eviction rate was twice the national average, yet according to the Kentucky Center for Investigative Reporting in 2018, that rate decreased overall, but for an increase in a few neighborhoods that are the hardest hit in Louisville by poverty across the board.
For those struggling to find a place they can afford or those advising would-be renters, Parker advised investigating local financial aid programs who may be able to assist. “If you have a nut or a nest egg, there are programs to get housing,” Parker said. The main questions to ask yourself whether you rent or buy remains: Do you have a secure job and know you can make monthly payments?
As to one of the housing programs Parker mentioned, she donates a portion of each real estate closing to the Prescription for Homelessness, offered by the Coalition for the Homeless, to aid young adults to obtain housing who have aged out of foster care. For more information on the organization, visit louhomeless.org.