It is always a no contest when you are asked to choose between paying rent or paying mortgage because most people would choose the latter over the former. But not everyone gets to just drop their place of rent and simply take up a mortgage loan. There are a lot factors to consider like income, lifestyle and even the size of the family.
This only gets to be a bigger issue the more you go through life because the older you get, the more crucial a house is whether as a place to live in or as part of your overall retirement plan. Gallup.com’s latest survey revealed that consumers usually retire at age 65 and it is around this time that a house becomes even more of a financial issue.
There are advantages as well as downsides to getting a house of your own and none is more apparent that the financial requirements. It might be hard to comprehend a system that will ask you to fork out a sizeable amount on a house when you are just starting out. But it is all part of the ownership and equity process that they say would make you pay off your house over time.
This leaves a lot of people to consider renting in the meantime as they either save up for a downpayment on a house or to weigh in on their housing options. Some consumers try to figure out a way to save money on rent by either considering options outside the city or biking to and from work to save on cost.
Paying rent at old age
Taking out and trying to pay off a mortgage loan is one common denominator American consumers have. This is according to a recent Pewtrusts.org survey which shows that about 80 percent of consumers have mortgage loans in their household budget. But this also leaves a good 20 percent who are renting out a place to stay and some of these are the older consumers.
Here are a few reasons so you can understand why there are older people who prefer to rent rather than own a house of their own. There are some who finds themselves in a renting situation while there are others who really wanted to end up renting.
- Demographics is an important housing component. Diversity is a big thing in the country and there are numbers that shows how diversity in ethnicity and homeownership are interrelated. This can take shape in the form of job opportunity being present to minorities and their ability to take up or even get a loan approval. This should not be the case but it is happening in society. This leads to older minorities having to stay in a rental than being able to enjoy a house of their own.
- Tighter loan approval. There are a lot of things you need to remember before taking out a loan especially something as big as a mortgage loan. But you also need to realize that because of the most recent recession that hit the economy, there are a lot of banking institutions that tightened their grip on their funds. They are all trying to be a little more cautious with their loan approvals to mitigate the risk of losing their investment. This could lead to more people losing out on the chance to own a home.
- Timeline. Taking out a mortgage loan is not something you decide on one morning because you just feel like it. You need to consider a lot of factors when weighing out your options. In the same manner, you need to understand that these types of loans are usually locked in for decades of payments. Which means the sooner you take out a loan and start payment, the earlier you get to pay them off. There are some consumers who are already comfortable with paying rent that it might have taken then some time to finally decide to take out a loan. By that time, it would already be too late in the game and would force them to continue working well into their retirement age.
- Income. Your earning capability is a big factor in whether you can take out a loan or not and even if you will be approved for one. This can also help you shorten the payment period for your mortgage loan in case you started late in the game. It is safe to say that your income is one of the major considerations you need to focus on when you are trying to decide if you can just continue paying rent or finally take out a mortgage loan. If you are married, you need to consider the income of your husband or wife as well but be wary of the combined expenses also.
- Existential threat is a factor. The topic of getting a home or not becomes a more complicated issue the older you get. As time goes by, your priorities, lifestyle and family orientation change and you would need to factor all these in as you age. It is always better to have a house of your own when you reach old age but is the house affordable and in decent shape? Would you have a hard time maintaining and cleaning it? There are some of the reasons why some older people prefer to stay in nursing homes for comfort and care that they can get around the clock.
Why renting is favorable for some people
USNews.com shares that millenials are being outpaced by older consumers in taking up rental spaces. Here are some of the reasons that can explain this phenomenon.
- Low maintenance. Upkeep, repairs or simply cleaning the house becomes a lot harder as you age. You might not be able to reach that roof like before or clean the garden on your own without your back breaking into a million pieces. The toll that it puts on your body is something older people cannot handle that is why they choose to rent so they do not have to worry too much about maintenance.
- Taxes and insurance. Homeowners know all too well that their escrow account with regards to their mortgage payment would normally consist of taxes and insurance payments for the house. This is because as owners, it is their responsibility and ensure these are paid out every year. When people rent, this becomes the responsibility of the landlord and they do not have to worry about sending the payment every year.
- They get to be mobile. This applies not only to the older sector of consumers but even with the younger ones who doesn’t quite have a grasp of what they want to do in life. They are out exploring their options and with this comes the need to be mobile and be able to chase their dreams in moment’s notice. Paying for a house could hinder that because it might take a while to find a suitable buyer. This is why they rent, to be able to move around and decide what they want out of life.
Paying rent is not all that bad but owning a house remains to be one of the top American dream. It is where they will raise up their family, get the dog to run around the lawn with the kids and be able to get their kids separate rooms and beds. But there are older people who are choosing to rent for a few good reasons such as mobility not having to worry about maintenance.