SEATTLE -- A place to call home can be expensive for people who rent in Seattle and surrounding cities. Most renters are required by many landlords to pay for the first month’s rent, last month’s rent and a security deposit all before they receive keys to their place. The expense can be a financial obstacle for people living paycheck to paycheck.
One credit union is stepping forward to try and help renters come up with the cash to move in without going broke.
Seattle Credit Union launched “Renters Loan” in October, an offer for anyone who lives, works and worships in the state of Washington. Company officials said people are already signing up for the loan.
Tonita Webb, the company’s EVP and COO said it’s they’re way of trying to help people deal with the area’s rising costs for housing.
“It’s a real community issue, right? Rising rents, rising costs, more and more homeless people on the street because they just can’t afford to live. And it’s not that they can’t afford the rent, it’s the other things that come with it,” said Webb. “Our vision is to be Seattle’s partner in growth and prosperity. So, in order for us to do that, we got to bring products that help our community prosper.”
RENTCafé.com is a national company that tracks multi-family developments and rental cost trends. The online company’s data collection for October 2019 shows Seattle renters pay an average of $2,122 for 696 square feet. In Tacoma, the average rent for October 2019 was $1,323 for 834 square feet. In Everett, the average rent for October 2019 was $1,462 for 856 square feet.
“A lot of people— they can afford the monthly rent. However, you got to come up with the first, the last, the security deposit and if you have a pet there’s a pet deposit. And sometimes they need help,” said Webb. “It’s getting more expensive to find a place, even if you have a good-paying job.”
Webb said the loan ranges from $2,000 to $10,000 and people can apply even if they have poor credit. She said she believes it’s a smarter alternative than paying to move in with a credit card.
John Christianson, owner of Highland Private Wealth Management, said the loan may not be the best option for people.
“That’s going to be an expensive way to get money to get into a place,” said Christianson. “You’re not far away from credit card interest rate anyways. So, those are very short-term solutions to a longer-term problem.”
Christianson said it’s not just the loan’s interest people should consider.
“The key question will be 'Can I? Can I afford that? Can I budget that in? Because I’ve still got to pay the rent to the landlord. I still have to pay that on time, and I have pay back this loan. So, there’s a couple of pieces there that have to fit into your budget and that may or may not work for you,” said Christianson.
Instead of paying for another bill, Christianson advised people to weigh all their options, including commuting from a less expensive community.
“Taking a clear look at your budget and saying am I living so close to the financial threshold where there’s nothing there that I got to make some adjustments? Maybe I can’t afford to live here, maybe I need to take a job in a different type of community that allows me to really build the kind of financial life I want,” said Christianson.
Webb said the company understands the loan may not be the best option for everyone. She explained that’s why SCU offers financial advising to clients before deciding.
“We like to talk through it to make sure this is the product for you, this is something that you need. Because we’re not here to put someone on a product that’s going to create bad debt, right? Some debt is good because you build, you build your credit score, you learn how to navigate finances. So, we have that complete conversation,” said Webb.
Christianson said not everyone has the opportunity to contribute money to a savings account. He understands the loan may be the only option to get into housing for some people. However, he’s encouraging people to start considering setting aside emergency funds.
“Preparing to have liquidity available for these kinds of unforeseen things that come up in all of our lives. We have to have money available for those types of things,” said Christianson.
Webb said SCU anticipates clients would be able to pay off the loan in about one year.