In addition to the good advice in the video below, there are other considerations when you are renting out your home. You’ll need to inform your insurance company that the home is now a rental. Be sure that you can pass on the additional cost of insurance in the monthly rental fee. You are also obligated to inform the town or city where the property is located. Your tax rate may be higher so be sure to include that as well.
Video: Should You Rent Out Your Home?
Video Transcript: Should You Rent Out Your Home?
Welcome to Today’s Home Update, I’m Carrie.
Today many homeowners are considering renting out their current home, after moving into a newly acquired property. If you’re considering this option, Marcie Geffner at BankRate.com offers some important advice.
According to Geffner, to cut monthly interest expense you may want to refinance the house you’ll be renting. However equity can be a big hurdle in the effort to refinance a rental property. Lenders typically require a cushion of up 25 percent or more to refinance a loan secured by a non-owner occupied house. The reason? An owner who has a substantial stake in the property is less likely to default on their mortgage.
When deciding whether to rent out your home or not, here are other pros and cons to consider.
Pros include; keeping the property to sell later at a better price, gaining rental income to cover mortgage, taxes, insurance and other costs, and benefiting from tax breaks that will offset rent or other income.
Cons to renting your home include; having to act as a landlord, dealing with damage to your property by renter, and possibly being taxed on gains if you later sell.
Thanks for watching Today’s Home Update. See you next time!
