Does It Ever Make Sense to Sell Your Home & Rent Instead?
When it comes to a place to live, you have two main options: rent or own. Ownership has distinct advantages, like the freedom to do what you want with the property. However, in some cases, it makes more sense to sell your house and rent instead, depending on your finances, personality and plans for the future.
Taxes and Maintenance
When you own a home, you are responsible for all taxes related to the property. If something wears out, is dangerous or becomes outdated, you are the one who has to take care of it. Together, taxes and maintenance costs can be thousands of dollars per year, depending on the condition and size of your home.
When you rent, your landlord, not you, is responsible for both taxes and maintenance. Selling your home and renting instead makes sense, therefore, when your current income makes handling the mortgage, taxes and insurance, and repairs too challenging. Because homes have greater maintenance costs the older they get, and because retirement incomes tend to be lower than incomes during work years, this can be a particular factor for older individuals.
Flexibility
Owning a home doesn't provide as much mobility as renting does. With a home, there is no guarantee that the property will sell right away, if you need to leave the area for a pressing reason. By contrast, you can leave a rented property as soon as your lease ends, and sometimes landlords will let you out of your lease even before the lease ends if you pay extra through a buyout clause. Selling your home is a good move then if you are in a career that requires frequent relocation -- for example, military service -- or if you want to keep your options open about exploring new locations.
Debt and Foreclosure
Occasionally, due to adjustable-rate mortgages or life changes like job loss, for instance, homeowners get into debt and find it hard to make their mortgage payments. If you're still paying on your property and are facing the risk of foreclosure, a sale makes sense for two reasons. First, the proceeds from the sale pay off your mortgage, assuming the property sells for enough. This means you'll have more income available to put toward other debts; this gets even better when you consider rent costs generally are cheaper than ownership costs, leaving even more money in your budget. Secondly, because the sale lets you avoid foreclosure, you'll preserve your credit rating and history. This can make a big difference if you need financing in the future.
Living Assistance
When you are disabled, or if you have a medical condition that requires constant or nearly constant care, you may not be able to tend to a home or be safe on your own. In these cases, you might be able to sell the home and use the money you get for rent and other expenses at an assisted living facility. This option is most beneficial if you can find a facility that offers subsidized housing.
Considerations
Although renting is beneficial in multiple scenarios compared to owning your home, if you sell your property, you will not be able to use your home as collateral or for a home equity line of credit. You also will not have a property available to give to your heirs you, although some of the money you save from renting may be put into an inheritance account.
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