Renters Beware

Whether you are relocating, saving up for a down payment, downsizing to pay off debt or in a financial transition, you may find yourself renting a home at some point. More and more are renting because of the gun-shy mortgage companies and their strict loan programs. However, just because you aren’t committing to a deed and won’t have to negotiate closing costs, doesn’t mean the word “foreclosure” is out of your vocabulary. If the landlord isn’t current on their payments, you could find yourself in need of new housing only a few months into it once your kids are established in their new schools and your things are all moved in. This is much more prevalent with the market conditions we are in today. According to rentalforeclosure.com, over 173,474 renters have been evicted this year due to foreclosure. Even well-intended homeowners rent their house as a last resort to save the mortgage, but still end up foreclosing leaving the renter in a messy situation. Here are a couple things you can do to be ahead of the game:

Qualify Your Landlord
While they are running your credit and checking out your rental history, you should be doing some investigating of your own. Make sure to check the local public records to see if the mortgage and taxes are current. How long have they owned the home? Find out their reason for renting and the stability of their source of income. Rentalforeclosure.com offers a free searchable database of rentals in foreclosure.

Ask For A Notice
If everything checks out ok, there is still a chance that halfway into the lease agreement, the landlord has financial troubles. The problem is, legally, landlords are not required to give tenants notice of foreclosure. So, the only notice you may receive is a foreclosure note tacked on the door. You may consider adding a legally binding clause to the contract requiring them to notify you if the mortgage is more than 30 days past due. In some markets, this may have been over precautious, but not in todays.

The last thing you want to get into the middle of is a foreclosure that isn’t even yours. Take a few extra steps to ensure that the seemingly perfect rental home isn’t a catastrophe waiting to happen.

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