Keep or Sell? What to Do With Your Property When You Relocate

Posted On Thursday, 10 September 2020 21:00

Your long-awaited job promotion comes with only one catch—it’s 1,572 miles away. Now you’ve to wrap your mind around that pending relocation.

As if securing the role wasn’t stressful enough, relocating is sure to add to your stress. Between looking for a new place to live, saying goodbye to your friends, packing up all your memories into new boxes, it can be hard to figure out where to start—and even harder if you have a family.

And then there is that dilemma of how to deal with the family home.

Whew! We’ll let you brood and groan for 10 seconds, then address the elephant in the house. Should you sell the house, rent it out, or simply keep it? If you find yourself in this situation, here are some key things to consider.

1. Do You Have Enough Equity to Sell the Home?

Home equity refers to the percentage of your home that you truly own.

If you bought your home with your own cash, then you’d have 100% equity. However, most people take the mortgage route, which means they build up equity as they pay the loan.

Home equity is calculated by subtracting the loan’s outstanding balance from the current market value of the home. Let’s say your home’s market value is $200,000 and you owe the mortgage company $150,000, then your home equity is only $50,000.

So how does your home equity affect your selling decision?

If you have a lot of equity in the house, selling it becomes a profitable option. By doing so, you’ll have enough money to pay off the mortgage, cover the cost of selling and moving, and still have enough to pay the down payment for your new home.

And if you wish to sell your house quickly, there are many companies like that are always ready to buy your home fast and hassle-free, so you’ll be able to accomplish everything within the stipulated time frame for moving.

What if you don’t have enough equity? In this case, you could consider renting the house out to augment your income as you build more equity, then sell it later.

2. Does Your Income Qualify You to Carry Both Mortgages?

A lot of weight lies in your ability to secure another mortgage.

Can you buy a new home without selling the first one? If so, keeping the family home would be a better option, especially if it holds a lot of value and meaning to you.

However, if your income can’t allow you to finance both mortgages, then selling or renting out the old house becomes the only option. Keep in mind that most lenders have strict guidelines for residential mortgage loans and won’t provide loans for multiple primary residences.

That said, holding on to your current home could potentially deter you from buying a new one in your new location.

What about renting out the property?

I mean, that’s extra income, right? While this may sound like a feasible option, it does come with extra costs of hiring a property manager and maintaining the premises. Plus you’ll have to convince your lender that the rental income will be enough to service both loans.

What are the Risks Involved?

Lastly, you have to consider the risks involved in each option before making the final decision. For instance, if you put the house up for sale, you run the risk of not selling it within the stipulated time, leaving you with a heavy mortgage burden.

Keeping it is also not risk-free. Unless you’ve 100% equity, keeping the house will pinch your pockets hard as you’ll now have two mortgage payment obligations. And while renting it out may seem like a safer option, you run the risks of not being able to pay the expenses for both homes in the event the house remains vacant.

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