When your mortgage payments become too much, you might have to sell the property to another prospective buyer or to avoid giving it back to your lender in a foreclosure scenario. However, if you want to stay in your home, these alternatives might be more beneficial.
If you think you should sell your house, it is important to research the fluctuations in asking prices, sale prices, potential buyer trends, and to read the economists’ analysis of the year-over-year movement of the seller’s market.
Home selling is a big decision whether you’re planning to move into your next home with a new mortgage or are interested in property management by purchasing an investment property.
Whatever your goals, it’s worth considering a few alternative solutions that might help shoulder the burden of high mortgage interest rates and a potentially bleak post-pandemic real estate market for home sellers. In this article, we’ll review three alternatives that might be worth pursuing.
For many homeowners, situations may arise that can leave them asking, “Should I sell my house now?” For example, interest rates could go up across the housing market, leaving homeowners unable to sell their properties due to higher mortgage rates.
Alternatively, a homeowner might consider moving to an area with a lower cost of living. For example, a homeowner might not have built up enough equity in their home over the years, and now they’re looking to purchase a home in a less expensive area.
In many cases, homeowners have considered selling, not because they’re searching for a new home or to maximize closing costs, but because they have no choice. The current market conditions, their personal financial situation, or an unexpected life event can leave homeowners unable to pay their mortgages.
In these scenarios, the bottom line is that selling the home can often be a much better option than undergoing foreclosure and losing it. The truth is that you have a few options that might be better than outright selling your home. Here are three of the most effective ways to avoid selling your home:
The first option is that you can always rent your house to tenants. Renting a property you own is ideal if you have somewhere else to stay. On the other hand, you can rent a spare bedroom or additional space and remain on the property as the primary tenant and homeowner.
In either case, renting your house could give you some side income, helping you keep up with your mortgage payments or save enough money to negotiate a refinance with your lender.
If you choose to rent your house, there are two types of rental setups you can pursue:
Long-term rentals involve signing rental agreements with tenants for several months, a year, or even longer. By doing so, you’ll become a landlord, which means you will be responsible for taking care of the property and handling maintenance tasks (landscaping, renovations, appliance upgrades, etc.). In return, you’ll collect a predetermined monthly income from your tenant(s).
Renting your property this way gives you the opportunity to generate an extra income stream. Many landlords operate exclusively in this manner and don’t need other jobs as they have enough rental properties to cover their expenses.
If you’re having trouble making your mortgage payments, renting could be an easy way to help. If there’s a low inventory of homes or renting options, you might even be able to rent the property for more than your monthly mortgage costs.
However, renting your property long-term will introduce several more responsibilities you’ll need to fulfill. For example, you’ll need to market the property and interview potential tenants to get started. You’ll also need to keep the property looking good and take care of any required maintenance. In some cases, you might be losing money for a while before you start to turn a profit.
Short-term rentals can be highly beneficial if your property is in a great location with the curb appeal to attract a lot of vacationers, out-of-towners, or tourists. With short-term rentals, you can charge premium prices for those who stay in your property for days, weeks, or months instead of years.
Again, you’ll need to tackle all the responsibilities of being a landlord. That can take a big bite out of your time and income (you’ll need to pay fees for renting, pay for maintenance supplies and jobs, and so on). Many short-term rental tenants expect extra features or perks for their vacation homes, as they’re likely paying premium prices that surpass a hotel room.
The difficulty with this rental arrangement is that there will likely be many months without renters, depending on the season and your location.
If you live at the beach, for example, the winter months may be pretty slow. If you think you’ll have a hard time booking short-term rentals year-round, then the stability of long-term renting may be a better fit.
If renting or leasing your house doesn’t sound very attractive, you might consider co-ownership with Balance.
The way it works is Balance will purchase your mortgage by paying off the remaining amount. By doing so, we’ll make an equity investment in your home. Instead of making a mortgage payment every month, you would now pay us a streamlined monthly fee that covers occupancy, insurance, and taxes. We’ll become co-owners in your property with you, but you’ll remain the residing owner of the property.
In this way, you can be freed of the burdens of home ownership and enjoy the financial flexibility needed to get your finances back on track. If you ever want to move, you can sell your remaining property ownership and receive fair proceeds from the home sale.
Absolutely. Balance helps create a path back to owning the home on your own by strengthening your finances and improving your credit.
Here at Balance, we’re committed to helping people avoid foreclosure and stay in their homes. When you partner with us, we’ll pay off your mortgage entirely and pay our share of the expenses each month. If you qualify, you also have the option to obtain cash out to pay off additional debts.
When homeowners co-own with us, they are given an excellent opportunity to pay off debts, improve their credit scores, and stabilize their finances while staying in their homes and retaining ownership.
With Balance, you’ll no longer have to worry about selling your home to avoid foreclosure. We’ll take the mortgage entirely off your hands and make it much easier to rebuild your financial stability while allowing you to remain in your current home. Compared to selling, renting, or leasing your home, co-owning it with Balance is the superior option.
Why wait? Contact Balance today to learn more.
Sources:
Cost Of Living Comparison Calculator | Bank Rate
5 Tips for Renting Out Your Home | Investopedia
Home Equity: What It Is, How It Works, and How You Can Use It | Investopedia
