Many people with the inability to meet their monthly mortgage obligations consider the sell and rent back strategy. More so used in England than in the US, this strategy may be the solution to avoiding a repossession of your house and may help out homeowners with liquidity, giving them an instant boost as far as their cash flow is concerned.
This article will take a closer look at the strategy to determine its effectiveness.
The big advantage of a sell and rent back is that, given a willing buyer, you will not have to move - at least in the short term. As part of the sale agreement, the buyer gives you not only money, but also a rental agreement. This sell and rent transaction is actually two transactions rolled into one.
Another advantage is the fact that all past due monies owed to your bank will immediately become the responsibility of the buyer. If you're four months behind on your mortgage, you'll no longer owe that money to the bank, even after the sale of your home. The buyer and the bank will be responsible for working out a plan that satisfies these unmet obligations.
Naturally, there are disadvantages to this strategy too. But they're minimal compared to the relief that a sell and rent back strategy might provide. They're also far less consequential than a repo, bankruptcy, or foreclosure.
You're also likely to get something far less than you'd normally get for a sale price, as your desperation to sell your home quickly will force you to accept a lower price.
Failure to do so will have the same ramifications on your credit that missing a mortgage payment did. You'll also be signing a rental lease that eventually winds down, meaning that your time spent in your existing home may be limited.
All in all, the benefits generally outweigh the cons considering the risks of not acting on a situation that's forcing you to miss your monthly home payments. This is a strategy that should definitely be considered if possible.
This article will take a closer look at the strategy to determine its effectiveness.
The big advantage of a sell and rent back is that, given a willing buyer, you will not have to move - at least in the short term. As part of the sale agreement, the buyer gives you not only money, but also a rental agreement. This sell and rent transaction is actually two transactions rolled into one.
Another advantage is the fact that all past due monies owed to your bank will immediately become the responsibility of the buyer. If you're four months behind on your mortgage, you'll no longer owe that money to the bank, even after the sale of your home. The buyer and the bank will be responsible for working out a plan that satisfies these unmet obligations.
Naturally, there are disadvantages to this strategy too. But they're minimal compared to the relief that a sell and rent back strategy might provide. They're also far less consequential than a repo, bankruptcy, or foreclosure.
You're also likely to get something far less than you'd normally get for a sale price, as your desperation to sell your home quickly will force you to accept a lower price.
Failure to do so will have the same ramifications on your credit that missing a mortgage payment did. You'll also be signing a rental lease that eventually winds down, meaning that your time spent in your existing home may be limited.
All in all, the benefits generally outweigh the cons considering the risks of not acting on a situation that's forcing you to miss your monthly home payments. This is a strategy that should definitely be considered if possible.
About the Author:
Mitchell Pratt is a real estate enthusiast who tries to see the good in every bad situation. He loves to help those in need with free advice at his blog, where he discusses issues such as the sell and rent back strategy and how to execute a quick house sale.
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