Before the housing boom, the Residential Energy Consumption survey conducted by the U.S. Department of Energy in 1995 shows that Americans have an average of 721 square feet of living space per person. Today, the average square feet of living space closer to 1000. The low interest rates and easy lending standard encourages people to buy bigger and bigger houses, leaving many with a house twice the size as they really need to live comfortably. If you are one of the many Americas in this situation, here are some helpful ideas.
If you bought your house with 0% down and it’s worth less than your mortgage loan, then your best option is to just foreclose. You have nothing to lose but your credit – which will be restored with time anyway. But, if you have a significant amount of money in your house, than foreclosing is a much harder choice – and in this case you need to look at your long term financial outlook. If you are likely to lose your job in the next few years, then you should consider foreclosure now rather than sometime in the future. There are lots of houses for rent and the cost of renting is very low because of the many houses that are not selling, so you will find another place to live. If you are planning to foreclose, call your lender after a few months of missing payments and ask for a non-recourse foreclosure, which means the bank accepts the house as full payment and gives up their right to try to get any more money from you in the future. (You should consult a licensed professional before making any of these decisions)
If you wait it out, all mortgage lenders are eventually going to be in very difficult positions. Eventually your lender will be forced to do whatever they can to keep you from foreclosing, even if it means forgiving 50% of your loan value. Life is not fair, and it’s not going to be fair when the guy next to you gets his mortgage cut in half while you paid full price. If your lender will not budge, then ask to refinance at a lower fixed rate. If your lender still will not budge, as most lenders are only negotiating with delinquent borrowers, try stop paying your mortgage for a few months and then ask again.
If the house is your primary residence, consider renting a room to a college student. If there is a college in your area, just put up flyers on the college bulletin boards advertizing your room for rent – emphasizing the many advantages of living in a house vs. a dorm room. How about a college exchange student? Call your local college and ask about their exchange student program. College exchange students are students from other countries that visit the US by attending a US college. They usually prefer to stay in a house close to the college in order to take full advantage of their stay by learning everything they can about our culture by living with a family. You can also try finding a niece or nephew in your family tree that wants to try living on their own. This idea is especially enticing if you live in a distant place from your niece or nephew because of the added adventure of traveling to a new land and experiencing new things.
You can also market the benefits of living in a house to apartment renters, by posting flyers on apartments in your area. You can offer benefits like, a garage, a yard with a nearby park, a private entry or allowing pets. There are a lot of people in apartments that would love to enjoy some of the benefits of home owners.
Find another family to live with you and share the costs of your home. This works great if you have a house that is naturally separated like a rambler with a finished basement because it gives each family the privacy they need. The kids will probable love the idea of more kids to play with and if you’re lucky one of your kids can babysit for both families from time to time. This idea can also cut the chores in half as both families help to maintain the house. To find a great family to double up with, just ask around your friends, family, church or other social groups that you’re involved in.
Start a Home Business
Leverage your home as office space to start a home business. Use an extra room for your home office. Your home business wouldn’t have to consume all your free time, just enough to help you pay your mortgage. I suggest that you start very small. The Internet is one of the best places to look for home businesses. You could try selling things on eBay.com or recruiting people for Monster.com or affiliate marketing for Amazon.com or any number of things. You could also call a few local businesses and ask if there is anything you can help them with from your home office, like accounting or letter writing or dictation or anything else.
A small income from a home business could be just enough to keep you ahead of your mortgage payments, and you can leverage the office space of your home to get it. A home business is also a great tax shelter.