The concept of renting has been around for years.
The concept is so familiar that people often use the same word to describe it, “rent”.
But a new study finds that renters who are trusted to pay their rent may be less likely to do so, too.
That’s because they’re less likely than renters who aren’t trusted to make the necessary decisions about their own finances, such as when to get a mortgage or when to rent.
Read more » What’s more, a study from Rutgers University found that those who are trustworthy to make payments on their own mortgage are less likely of doing so when renting, too: “A trusted landlord is more likely to provide a fixed payment, such that they will have a fixed monthly payment in the event of a change in the value of their property,” said lead researcher Jonathan Hockley.
“This may lead to a financial strain on the household, which could lead to financial strain in the long term.”
For example, when a new mortgage is approved, a trusted landlord may be able to keep the value, but the value could drop significantly in the future, causing the landlord to be unable to pay the loan.
This could make the financial strain worse.
A study from the University of Massachusetts, Amherst, found that renters and landlords who were trusted to keep their properties stable during the downturn were less likely in the near term to pay off their mortgages than those who weren’t.
“Renters who are less able to rely on the financial resources of a trusted financial institution or to have access to adequate resources in the longer term are more likely than their non-trustworthy peers to default on their mortgages,” the authors wrote.
And that’s not just a financial burden, either.
“In our research, we found that people who are perceived to be trustworthy, including those who were renters, were less financially secure,” said Hockle.
“While this finding suggests that people with financial resources and/or who are believed to be reliable to make decisions about mortgages are more economically secure, it does not mean that they are less financially stressed than others.”
The researchers also found that the financial burden of paying for housing has become more significant for people who live in poverty.
“We found that among those who reported being poor or had low household income, those who had a high level of financial insecurity were more likely for their financial status to be impacted by rent,” the study said.
“These findings suggest that the increased risk of financial stress associated with having a high financial status may contribute to the financial vulnerability of those in low-income households.”
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