The COVID-19 Crisis Is Disproportionately Affecting Renters
by Maurie Backman | Updated July 19, 2021 - First published on Sept. 4, 2020
Renters are hurting more than homeowners during the pandemic. There's help for both groups.
The COVID-19 crisis has hurt a lot of people financially. Millions have lost their jobs or seen their earnings take a hit. And apparently, renters are having a harder time coping than homeowners, according to a survey from the National Foundation for Credit Counseling® and BAI.
Specifically, 76% of renters say they have financial worries in light of the pandemic, compared to just 61% of homeowners. And a lot of that stems from not having an emergency fund.
It's easy to see why homeowners might have more financial security than renters right now, and why that tends to hold true in general. Homeowners often have the option to borrow against the equity in their properties, an affordable means of accessing money in a pinch. Renters don't have that luxury. Their borrowing options may be limited to credit cards -- a dangerous option due to the high interest rates they charge -- and personal loans, which have more affordable interest rates, but qualifying requires higher credit scores than home equity loans do.
On the other hand, there is a benefit to renting: having a fixed housing payment every month. While homeowners do have fixed mortgage payments and the option to borrow against their properties, they risk a host of unpredictable expenses, from property tax hikes to sudden repairs. Furthermore, right now, home equity loans and lines of credit are harder to come by because of the pandemic. So while being a homeowner might normally open the door to more borrowing options, that's not necessarily the case today.
It's clear that while renters may struggle more than homeowners right now, both groups may continue having a hard time during the ongoing recession. And both may need help making ends meet.
Seek assistance, no matter your housing situation
Whether you're a homeowner with a mortgage or a renter with a lease, if you're having trouble with your bills, help may be available. First, try to get some relief on your housing costs, because chances are, that's your highest monthly expense.
If you're a renter, talk to your landlord about deferring some payments or paying less each month until your financial picture improves. And if that doesn't help, see if you qualify for rental assistance.
If you're a homeowner, ask your mortgage lender to put your loan into forbearance -- you have the right to request up to 360 days of it during the pandemic. That way, you won't have to make your monthly payments and you won't be considered delinquent for withholding that money. That said, you will eventually need to catch up on any payments you skip, so talk through that scenario with your lender so you know exactly what you're signing up for.
If assistance with your housing costs isn't enough, you can also seek relief on other bills. Credit card companies and utility providers, for example, are offering accommodations to people who are hurting financially, so it pays to see what leeway you can get. And if your income has been slashed during the pandemic, look into unemployment -- even if you're still working in some capacity, you could be eligible under current rules.
Whether you rent a home or own one, if you're going through tough financial times, you deserve all the relief you can get. Be your own advocate, and remember that like all difficult situations, this one, too, shall eventually pass.
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