Moving out of town or into a new house can be an exciting time, but getting rid of your current home can be a hassle. Most homeowners, uncomfortable with the burden of two mortgages, wait to sell their current home before purchasing a new one. A slow housing market can impede the moving process. Renting the current home is one alternative for homeowners, who should weigh the benefits of selling and renting before committing.
Selling the home offers a clean break for homeowners. With a sale, homeowners can turn over the keys, mortgage and responsibility to a new owner. This freedom allows the homeowners to move on to their new home without the burden of multiple mortgage payments. Homeowners can use the equity in their current home -- and perhaps a profit they make as part of the sale -- as a down payment for their next home.
However, selling the home comes with its share of hassles. If the housing market is slow, it can take months or even years to sell the house. Even in a good market, if other homes in the neighborhood are for sale, homeowners face stiff competition when trying to sell their home.
Renting out the home is an alternative to selling it. In a slow economy, a homeowner can likely rent out his home before he can sell it. Thus, renting can expedite a move. Plus, the homeowner can hold onto his property and try to sell it when the housing market improves.
However, renting out the home comes with financial responsibility, as the homeowner is now be responsible for not one, but two, mortgages. Even if the rent covers the monthly mortgage payment, the homeowner is still responsible for general maintenance on the home as well as any homeowners' association fees.
Homeowners must consider their financial situations when deciding between selling and renting. If a homeowner needs her current home's equity to buy a new home, renting simply isn't an option. However, if the homeowner has other money available for a down payment on a second home and the housing market is in a slump, she might make more money from a home sale if she delays it until the market improves.
Becoming a landlord comes with its share of costs. In addition to regular upkeep on the house, many homeowners outsource the landlord responsibilities to a property management company, which comes with a cost.
Although the financial responsibilities associated with renting a home certainly play into the decision, homeowners should consider other factors as well. If they are considering renting, they need to determine whether they are willing to take on landlord responsibilities, like fixing a broken air conditioner in the heat of summer or responding to a water leak in the middle of the night. If these responsibilities are too much, selling is the best choice.
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