After you buy your first house, you may find yourself in a situation where you need to sell it. Usually this will come as a result of outgrowing the smaller starter home that you purchased or it may be the result of changing jobs or a transfer. You may also realize that you are house poor and simply cannot afford to continue living there. In any case, you may suddenly feel like the blessing of home ownership quickly changes into a burden. If the market is slow or dead, you may have difficulty selling your home. Here are some options when it comes to dealing with your home.
Wait It Out
If you are moving because you want a bigger home, your best option is to wait out the market and see if things pick up in the next year or two. As you do this, you need to make sure that you have the home competitively priced on the market. You do not want to sell at a loss, but if home prices in your area have dropped since you purchased the home, you can either wait until the prices come back up or lower your price. Even with improvements that you have done to the home, you may be in a situation where you cannot make the money back on the home.
Waiting it out can be frustrating, especially if you feel cramped in your current home, but it is the best move financially. You can wait until you save more for a larger down payment on your home, and possibly make more money. If you have the flexibility to wait it out, you are less likely to lose money on the purchase.
Remodel to Fit Your Needs
If you want to move because of the cramped conditions in your current home, a remodel may be the answer. Most likely you have saved up some additional money to purchase a new house, and you may want to consider using that money to add an extra room or to change the floor plan of your home. You may have already done this if you bought a home that needed work to save money.
Although there are a lot of home improvement shows that demonstrate how to do this, it is worth hiring professionals, especially if you are adding on to the home in your backyard or changing the structural elements of your home. You may find that by reworking some things, you are able to make your current a place that you want to stay.
Renting Out Your Current Home
This is an option that you may want to consider if you are moving away from the area, or if you are in a situation where you can manage both loans. Many people can rent out their homes for more than their current mortgage payment, which means that you may be able to stay afloat until the market recovers. There are a lot of factors to consider like maintenance, managing renters, and making repairs. The easiest way to do this is through a rental agency.
You should also weigh the risk and the chance that you may lose money in this situation. Being a long distance landlord can be tricky, and if you move away, you will definitely need a rental agency to handle the property for you. You need to know what will happen if your renter skips a payment or you do not have a renter for a month or two. If you have money set aside to cover this, you may come out ahead.
Consider a Short Sale
You may also want to consider a short sale on the property. In order for this to happen, you will need to work with your mortgage company and see if they will even consider it an option. You may end up owing some money in fees or a portion of the balance depending on the mortgage company and the state that you live in. This will negatively affect your credit, and make it more difficult to buy a home in the future. It can also be difficult to get the lender to approve the short sale. You will need to demonstrate your financial hardship, and then possibly demonstrate that the value of the home has dropped. It is still a better option than foreclosure.