Is this possible??? I hope so. :)

[Joyfullyblessed]

Hello Everyone,

 

I have recently posted about our house being on the market, but then having to take it off due to my husband being laid off from work.

 

Well, my husband and I have been talking about all kinds of things and one thing that has come up is the possibility of re-listing the house and then us renting another home for a year.

 

Why??? Well, one of the big reasons for selling our home was so that we could pay off some debts with the money that we made from the sell of the home. It would REALLY help us out.

 

IF we can re-list and rent, then we would be able to actually pay off more debts than we thought by renting another home at this time. Renting would possibly give us time to get ourselves in a better spot career wise and even financially.

 

I have found that there are homes for rent in all of the neighborhoods we really like around here. We could rent for a year and then move within the neighborhood to a home that we want to make permanent easily.

 

One of the neighborhoods is a community and consists of 11 neighborhoods. There are a couple of homes for rent in the lower priced neighborhoods, so that is where we would target. Once the year is up, IF we still love the neighborhood, we could move to one of the neighborhoods that is a little higher priced and offers a bit bigger home.

 

These neighborhoods are also in very nice school districts which is important since we are sending our son to public school for the first time this upcoming school year. Our current home is not in the best school district for elementary or middle school.

 

Anyway, there are many reasons that this may be a great option. Oh, and when the year of renting is almost up, we aren't tied to having to sell a home like we are now. That is a nice plus too!

 

My question is... can you sell your home and then rent another even when hubby is currently laid off??? He is getting six months severance, but I don't know if that matters at all. Also, he is actively seeking employment & even thinking of starting his own business, so it is not like we will be like this forever.

 

So, is this possible? If so, I think I am wanting to get the process going because we worked very hard and put a lot of money into this home to get it ready to sell. It is in prime condition right now! :)

 

Thanks so much!!! Everyone have a great day!

Edited July 17, 2012 by Joyfullyblessed

[KatieJ]

Your landlord/property manager probably will run a background check and that will include verifying employment. I think it would be doubltful that anyone would rent to you without current employment.

[Quad Shot Academy]

If you use your equity to pay off debt, I don't see how you will recover the 20% down payment in a year. I imagine you will be renting for a lot longer. On the upside, if you are willing to move out of the area, you will be ready to go to a job anywhere, as long as you are renting month to month.

[Joyfullyblessed]

Yeah, we knew that most likely this would not be a real option. Oh well, that is alright. As I stated once before, it will all work out fine. :)

[elegantlion]

My concern would not be the renting, although you might be hard pressed to find someone to rent to you without an income.

 

It would be the qualifying for a home after the year is up. Even if hubby gets a new job, I don't know what the underwriting guidelines for stability is these days. I think (as in don't take my word for it) it would look better to stay in the home where you are with a gap in employment. If there is a gap in employment and you have lived in a rental for less than 2 years (that used to be guideline in insurance where I worked) it all goes against your stability.

 

If you wanted to sell and rent long-term (say 5+ years), it might be a decent idea. But again, you may have to know the right person to obtain a rental if your only income is 6 months of severance.

 

I say this with greatest empathy as my dh was under/unemployed for a time, but actively seeking employment doesn't count. A lot of people are actively seeking. Also starting your own business is no guarantee of any income. Most traditional businesses won't see a profit for 2 years, if you have to put money in up front. Self-employed (which we were for years) have an even harder time qualifying for a mortgage. It takes a proven track record of income. Then they will look at your net income, not your gross. Those numbers can be very, very different.

[sgo95]

We've rented for a short period (3 months) one time when we had no income. We were able to rent an apartment in a very large complex by showing enough funds in a bank account to cover costs for the 3 months.

[virtual_twins_mom]

We will NEVER move before the house is sold again! Banking on renting your house is not a sure thing. We thought the house would sell quickly, but it did not. We had two lease purchase agreements fall through even though they had paid several thousand dollars non-refundable deposit. We had renters about half the time the house was on the market (5 years!). We ended up having to put in roughly $15k in repairs over that time. Paying for two places to live nearly wiped us out. If we hadn't had significant savings and my husband still working, we would have had to file for bankruptcy. For us - NEVER, NEVER AGAIN. FYI - our current house is on the market, and we will not sign a contract on another house until this one is closed and we the money in hand. Good luck with your situation.

[3browneyedboys4me]

I'm not sure that I understand the financial gain in renting? Your husband is unemployed and you are going to pay a mortgage AND rent? I'm not sure where you live but most houses are on the market for six mos to a year now. How will you afford to continue to pay THAT mortgage and pay for a rental home?

 

I own another property that we rent out. It's currently on the market, but if I were looking at this scenario as a potential, I would want to see financial statements that indicate you could afford both.

 

I'm sorry. I know what it's like to want something even when it's not going to work out.:grouphug:

 

Hang in there. I'm sure something will work out for you all.

[mom2scouts]

As a former landlord, I wouldn't rent to someone who was unemployed and it seems unlikely that you'll be able to get a home loan in a year. My dh was unemployed and it took him many months to find another job and the new job has a much lower pay and no benefits. We've also owned a small business and we lived below the poverty level while getting it going because all profits needed to go back into the business. As someone else said, it's really hard to get home loans when you are self employed. Also, in our area, rent even in lower income areas would be as much as our current house payment. I guess it *could* be done, but I think it's really very risky.

[kricau]

Have you asked your mortgage company about refinancing? They are all very willing to do this right now, especially to stop a foreclosure. We just refinanced and it was actually free. We had a loan with a Freddy Mac/Fanny Mae corp. We lowered our interest rate and knocked a couple hundred of the amount we pay every month. If you could refinance and take out some of the equity (to pay off depts) and maybe even lower your monthly note, could you stay put?

[Joyfullyblessed]

Everything everyone is saying is making good sense. That is why I posted on here because I love that I can get so many wonderful responses. It helps me when I need to make a decision about something that should really be easy and common sense driven, well, easier.

 

I can play all sorts of "What if" scenarios in my head and they may sound great, but are not really do-able. Thanks for bringing me back to the real world. :)

 

I do want to clarify that we were not looking at renting before we sell our home. We just thought IF we could sell our house, then rent, maybe it would be a good option. Hearing all the advice and input though, I realize we weren't thinking right.

 

Someone spoke about putting 20% down on another home, but we were looking at going FHA and that only requires 3.5% down.

 

Around here, homes are selling and selling fairly quickly. I am amazed at the difference I have seen with homes moving in the past couple of months even in comparison to just five months ago. It is wild!

 

What would be great is if the seller of the home that we had a contract on would do a lease/purchase deal possibly. Again, that may be goofy thinking and probably could never work, but my mind is thinking of all kinds of things! :)

 

Most likely, we will sit here till hubby has a job. Then we will look at re-listing our home then if the market is still looking pretty good. We will NOT put a contract on another home prior to getting a contract on ours again. We learned our lesson this time around! :O

 

The guy who did our pre-qualify/pre-approval said that we should have no problem with our loan once hubby gets another job, so I hope he is right.

 

Also, we actually looked into refinancing before we even looked at selling our home. Seems that we ran into snag after snag with that though and it was very frustrating! However, when we looked at selling our home as an option instead, things went incredibly smooth. Just seemed like the right thing to do.

 

Anyway, we will just stay in our home right now. It is a good home overall in a great location. We have our son going to a wonderful charter school down the road, so we have that part covered too right now.

 

Thanks again for all the sound advice. Good to know that others are thinking clearly when my mind is a bit muddy right now. :) Everyone have a very good day!

[Samiam]

I would also not recommend it, for the reasons others mentioned....and here's another one....in the very worse scenario......landlords can evict rather quickly if you don't pay rent..and late fees are added on, usually by the 5th of the month, and they can often come knocking. Mortgage companies are usually slower to get the ball rolling on all of that, and they don't usually come knocking for several months (they might call, but they don't come to the door).

 

Hoping it would NEVER get to that point for you, in terms of not being able to pay for housing, but if it ever did, being in a mortgage situation does give you a bit more time to recover when your DH does get a job, and hopefully get caught up, then a landlord ever will.

[Tap]

A note for each side of the equation:

 

Pro-move: You may talk to the bank and find out if there is an account that you can put a years worth of rent into (from the sale of your house) that you can then use to release the funds each month to the new land lord. This way you can show the land lord that you have the money set aside to pay for years lease ahead of time. I would not, prepay the lease, just incase the landlord is not ethical or the rental house goes into foreclosure.

 

 

Con-move: If you are in a rental or lease, you are at the mercy of the landlord. I have two different friends who were forced out of rentals because the landlord didn't pay the mortgage and let the house go into foreclosure while they were renting. I know other people who expected to continue a lease after the first terms were up, and then were told the house was no longer for rent, and then they had to move unexpectedly. Moving is expensive and it added huge costs to these families, when they were not expecting it.

 

 

I would stay put, to avoid the extra stress that moving puts on a already strained situation.

[labst60]

We purchased a home in October (this was a move from PA to FL)

DH had been at his new job for less than 2 months- no trouble at all with the mortage - we put 10% down and got a HELOC for the second 10%.

 

My brother purchased a new home last June (their first home). No idea how much they put down, but sure it wasn't 20%. He had been at his job less than 4 weeks. They could have closed earlier but the mortgage co did want at least one offical pay stub! (This was a medical residency at a large hospital - so he had known for months he where he was going/ when he was starting, just didn't start untl the program began.)

 

Homes tend to be rented via individuals. If you offer to put down a larger deposit, I think you will find someone willing to rent to you.

 

FWIW, if this is really what you want to do - I would keep my house on the market - if someone is willing to buy at the right price - accept the offer contigent upon you finding a suitable rental within 14 days. If you can't - then the sale contract becomes null/void and you really haven't lost anything. If you can, then it all works out great!