Even though many define the American Dream as becoming a homeowner, more consumers are hesitating when it comes to taking out a mortgage in order to make that dream a reality. Consequently, some are choosing to rent instead of own.
The National Foundation for Credit Counseling recently conducted a poll that shows almost one in five survey respondents feel taking on a mortgage is just too risky. The NFCC mentions how the poll results align with the U.S. Census Bureauâ€™s recent findings, which underscore the reduction in home ownership.
The home ownership rate for the first quarter of 2014 is 64.8%, which is the lowest home ownership rate in almost 19 years, reports the NFCC. The organization says not taking on a mortgage might be the best decision for those who may not be financially prepared for the costs that come with being a home owner.
Those thinking about purchasing a home must remember that they will have to deal with not only the monthly mortgage payments but also home improvements, taxes and insurance, and general maintenance.
â€śRenting until they are in a position to buy can help a person avoid a costly mistake, including the negative ramifications of foreclosure,â€ť says the NFCC in a written statement.
The NFCC lists the following benefits of renting:
- Renting allows time to prepare for home ownership.Â Youâ€™ll be able to save more for a down payment, which can decrease the amount of monthly mortgage payments.
- Youâ€™ll have time to work on improving your credit. Building a stellar credit report and score can result in a lower interest rate on the loan.
- Renting allows for mobility. A 12-month lease is a fraction of time compared to a 30-year mortgage. If it becomes necessary to move for any reason, you wonâ€™t be shackled to your home until youâ€™re able to sell.
- Less money is required up front.Â Security deposits are much less than brokerâ€™s fees and closing costs.