Millions of Americans are becoming renters after their homes were foreclosed. While the transition from owner to renter can be difficult, real estate experts and financial consultants say it also can be an opportunity to change some things for the better. Here are some of their suggestions on how to make the most of renting after owning.
House or apartment? First, decide whether you want to rent an apartment, condo or house. But consider: People who have gone through a foreclosure may have an easier time renting directly from property owners than from apartment complexes, which tend to place more emphasis on credit history, said LaToya Irby, who offers financial advice on the Web site About.com.
Time to regroup. Use this time to save money and repair your credit, now that rent is often lower than a mortgage payment for comparable dwellings, said Ralph Roberts, who wrote Foreclosure Self-Defense for Dummies (John Wiley & Sons, 2008). Renters should stay current with bills and reduce credit card debt, he suggested, to improve their credit scores.
Changing schools. While some families may choose to stay in the same school district, others might use renting as an opportunity to move to a better one, or get closer to work or cultural attractions. Neighborhoods that were too pricey when you were buying a home or paying taxes may be affordable when you're renting, said Larry Cotter, general manager of Apartmenthomeliving.com.
"Living in a cultural center becomes a reality when you get rid of the notion that living in a home is the American dream," he said.
Check the landlords. The foreclosure crisis and accompanying real estate slump have created more rental homes. But there are also more reasons than ever for potential renters to be careful. Before renting a property, verify with the local tax collection agency that property taxes have been paid and see whether any paperwork related to the mortgage has been filed in civil court. Unpaid taxes or court filings could indicate the property owner is headed toward foreclosure.
"A lot of landlords are in trouble," said Roberts, a real estate agent in Sterling Heights, Mich. "Make sure the landlord you're dealing with is current."