People defend their homes with all their might. No matter how terrible things get, the homestead should be protected at all cost. That conviction is something I can understand. However, I am also concerned about homeownership becoming an unsustainable burden if you are in a job crisis or other financial crisis.
There are at least five reasons to consider selling your house if you’re facing a financial crisis.
1. Giving Yourself the Option to Take a Job Out of Town
Despite the fact that the housing market is at least partially recovering in most parts of the country it can still be very difficult to sell your home in a hurry in even the strongest markets. Owning your home could prevent you from taking advantage of opportunities in distant areas if you are experiencing or are facing long-term unemployment.
This has even been shown to be a global macro-economic problem.
Andrew Oswald, a professor of economics at Warwick University (UK), found a strong link between high homeownership rates and high levels of employment in the US.
“Home ownership can unwittingly hinder the labor market by deterring people moving in search for work. This is a time-consuming, expensive process; long commute times may discourage a householder from taking on a specific job.”
Flexibility is an essential requirement for today’s workers, as technology has become more commonplace. Strong evidence suggests that having a home, especially in a small market, can make it difficult to find new work. You might consider renting your house if you are in a field that requires frequent job changes and involves moving to another city.
Permanent housing is dependent on stable employment. This is becoming harder to find.
2. Move to less costly quarters
It is not unusual for people suddenly to need to reduce their expenses. This isn’t just about losing your job. There are many reasons you might need to reduce your daily living expenses.
You may have to accept a lower-paying job if you lose your job.
A rash of uninsured medical expenses could hit you.
It is possible that you will need to give up some income to pay for the college education of your children.
You may suddenly find yourself providing financial support for an older relative who is unable to do so on their own.
You may need to drastically reduce your living expenses if you’re in your fifties and have very little retirement savings.
This will allow you to make more money to pay for your retirement plans.
When you realize that you need to cut down on your living expenses permanently, it is possible to find that simply canceling services or clipping coupons doesn’t suffice. Sometimes, you need to cut your largest expenses. Housing is the most expensive. You may need to reduce your $1,800 monthly house payment to rent a $1,000 per-month apartment.
Although homeownership can provide tax deductions for certain circumstances, the monthly cost of ownership is likely to be $800 less than the regular price. You may also be able to free up capital for other financial purposes by selling your house.
3. Reduce your homeownership costs by reducing repairs and maintenance.
Most people, especially agents, ignore the effect of homeownership costs when calculating the buy-versus-rent comparison. These costs can be quite high. They can run into the thousands for every year of homeownership.
There may be years when it is only a few hundred. There will be other times when it will cost thousands of dollars, like when your roof needs to be replaced, your carpets, rotted wooden siding, windows, and your flooring, or when you plan to remodel your kitchen, bathrooms, and bedrooms.
These expenses can lead to unexpected windfalls that seem to occur at the worst times. These expenses will disappear if you rent out your house or sell it. You can simply call your landlord to fix something that isn’t working.
4. Eliminating the home’s maintenance and repair costs can be a huge advantage if you are having financial difficulties.
Part of a plan for a more frugal lifestyle
While many money problems are temporary, some end up lasting. We mentioned earlier the possibility of having to care for an elderly relative or making up lost time when it comes to retirement planning. These are only two examples of many. To meet the challenges you will face on an ongoing basis, it is necessary to reduce your living expenses.
It is best to cut across all your expenses in order to achieve this. This includes reducing your house expenses. It will likely have a greater positive impact on your finances that any single move.
It is possible to reduce your monthly home payment by renting less expensive housing. You will also be able to eliminate the associated repair and maintenance costs of homeownership.
Other benefits are possible that are not as obvious.
You can almost guarantee lower utility bills by moving into an attached rental property, such as a townhouse or apartment in a garden-style setting. Attached housing will almost certainly have lower utility costs than a detached house. Some utilities may even be included in your rent. This is common for water, and sewer charges, as well as trash removal.
Renting a home is more time-consuming than buying one. You won’t need to spend your time maintaining and fixing the property. If you live in attached housing, you won’t even have to trim the hedges or cut the grass.
5. Avoiding Foreclosure
This discussion was saved for last, as it is something I have seen many times. One person loses their job and can’t find a replacement, has a business fail or is in a financial crisis. Then he refuses to sell his house. I have seen many people stay in their homes until they are evicted from foreclosure.
This situation can be stressful, so it’s a good idea to sell your house before the bank takes it. This has at least four benefits.
- You can sell your home to get a lower price, which will help you recover faster.
- You can get rid of any equity in your home that you might need to survive. Equity that would almost certainly go away if the property is foreclosed on
- You can sell your home to be in control of the process, and not react to the foreclosure proceedings.
- You can avoid foreclosure by selling your property. This will also protect your credit score.
If you feel your financial situation is not sufficient to afford a home of your own, it will be better for your health to sell your house privately than having it repossessed by the bank. If you are facing a situation which has you saying, I need to sell my house fast Minnesota, we buy Minnesota houses in any condition and can close the sale in as few as 21 days.
Overall, renting is better than owning a home. There are times when conventional wisdom is not applicable. Your financial situation may be changing. You should be proactive and take steps to improve your financial situation.