Rent Back your Own House After Sale to Save on your Mortgage

By: Derrick Adolfo

Rent Back is a special scheme whereby you can sell and rent back your property. As you know, this is an age of rising interest rates, and many people spend beyond their means against the leverage of their credit cards, and find themselves in a soup as and when the credit card debt accumulates. This can lead to an escalation of repayment problems. In such a situation, where you risk defaulting on your repayments, you can go for the option of selling your home quickly and at that, too, while being exempt from the usual costs involved in selling a house, such as the closing fees.

And, after the sale, the homeowner-borrower can rent back his own property at a payment lower than the mortgage payment. This is often a career-saving resort for a borrower to protect himself against financial ruin. Rent Back is a nice way to save the borrower's home from foreclosure, and to still retain residence of the house. It is also an opportunity that allows the homeowner to save face at a time when the situation might have worsened down to bankruptcy.

The owners may feel a little less harassed as to still be living in the house, even if sold off to another. For the companies, it is a profitable deal. They purchase the house at a lesser amount than the market value. It could be at even 75% of the actual worth of the property, which the borrower may be obliged to agree with due to his/her economically precarious situation.

This is not to say that before deciding on this scheme of , one should not consider other means of pulling oneself out of a financial crunch. For example, one may defer the mortgage payments through negotiations with the lenders, if one feels that the amount can be arranged within that period. This scheme can be a good idea when other options are exhausted.

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