It’s a fact, many homeowners are being foreclosed leaving them to rent while recouping and rebuilding. Having a recent foreclosure can make renting hard because landlords fear you might have a problem paying rent or late paying the rent. Fortunately, you can still rent after a foreclosure and/or bankruptcy. Many landlords are undeterred by foreclosed former homeowners as long as other credit is good. Many landlords will understand the need of a bankruptcy and such eliminated most other debt leaving the prospective tenant a lesser burden to pay the rent.
Still, you need to be selective on your prospective landlord, too. Follow the tips in this on-line rental fraud detection tool and you will certainly have your first line of defense reasonably well covered.
Find No Credit Check Apartments and Houses
Large apartment complexes are typically owned by companies that have strict corporate approval criteria. Ask the manager if they exclude folks that have had a foreclosure. Again, you need to do some screening too.
You’re more likely to get a credit check at one of these complexes (and denied if you have a foreclosure) so don’t apply where you know you are going to be denied. Why suffer the brain damage and humiliation?
Instead, look for houses, condos, townhomes, duplexes, and small apartment buildings that are owned by a single landlord. These types of landlords are less likely to do credit checks. Look for these types of residences:
- Check for signage by driving or walking the neighborhood you like.
- Ask friends and family. Ask social media friends.
- Check craigslist but be very careful as there is much fraud in the public arena. Here is another excellent fraud detection tool.
Rent Before It Hits Your Credit
If you apply for an apartment before the foreclosure is updated on your credit report, you have a better chance at getting approved. Timing it is tough since many people don’t realize foreclosure is inevitable until it’s happened. This is a result of what is referenced as the dual track system. So when it’s time to get out of this place, think of this Eric Burdon featured tune.
Bring a Co-Signer
You can get approved for an apartment, even one of the larger apartment complexes, if you have a co-signer or guarantor. Keep in mind your co-signer will be responsible for any unpaid rent or damaged done to the apartment when you move out. I am one of those who refer to cosigning as financial ‘suicide by pen.’
Keep Paying Your Other Bills
A foreclosure or bankruptcy might set you back, but it won’t ruin you, unless you let it. Continue paying your other bills. People with foreclosure often have more 90-day late pays to explain on their credit reports than those who haven’t gone through foreclosure. Those late payments make you even riskier in the eyes of a landlord. If you can prove to a landlord that defaulting on your mortgage was an isolated incident, you may be able to rent despite your foreclosure.
Rent To Own
As I’ve previously written about this subject, this is most often a very bad idea. With very few exceptions, I have never seen a financially advantageous rent or lease to own contract. This is not to say they don’t exist. This is to say you need an experienced real estate attorney to review the document(s) for you prior to your entering such an agreement. I have seen back to back fraudulent lease-to-own situations. Use care, you do not need to buy someone elses problem unless it is good for you.
“Don’t ask, don’t tell” is a good philosophy to follow when it comes to renting after foreclosure. However, lying about it will probably cost you a rental opportunity. If you’re asked if you’ve ever had a foreclosure, be honest. Explain the situation and focus on how you’ve turned your finances around. Make sure the landlord understands that what caused the bankruptcy and/or foreclosure won’t cause you to be late on your rent.
Take a proactive stance by explaining your situation, be brief and forthright with the property owner or manager. You can also sign up for a service such as Transunion’s SmartMove* . “Your credit rating is completely unaffected. The screening process is quick, easy—and all online. Only limited information is provided to the Landlord – your SSN and account numbers are not provided.”
Rental Payments And Credit Reporting
Rental Karma*, a Denver based company will report your rental payments to one of the three national Credit Reporting Agencies.
What You Can Expect To Pay
Landlords and tenants may use the free software provided by RentMetrics* to get a sense of market rates by entering an area or an address and reviewing reasonably accurate pricing information of comparable units in the address’s neighborhood.
Better To Rent Or Own?
I must start with the answer: It depends. It depends on your employment, income, goals, expectations and many financial factors not all of which are related to the cost of housing. How certain are you of your ability to earn the same or more money if your employer relocates or closes? What are the long term aspects of the housing market where you wish to live? On May of 2014, the New York Times published an article in The Upshot section which contains a very useful calculator that is quite easy to use. Here is the link to this Rent or Own calculator, check it out if for nothing else amusement.
* I am not paid by nor do I endorse any business or website referenced in my posts.Financially Speaking – James Spray CCMB, CNE, FICO Pro | CO LMO 100008715 / NMLS 257365 | September 5, 2011 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.