Purchasing your first home is rewarding; it’s a perk of all the hard work that you did to get your piece of the American dream. What happens if you outgrow your home and need a bigger one? Do you sell it or rent it?
If you choose to turn your home into a rental property, be aware that there are guidelines and laws that you must follow;
• Duration – in most mortgages, it is written that you have to reside in the home for a certain amount of time. If you do not, you may incur harsh penalties from both the mortgage company and legally.
• Taxes – most often, when you convert to a rental property, your taxes will increase; contact your tax accessors office to determine if taxes will increase and by how much.
• Insurance – standard homeowner’s insurance does not cover rental properties, it’s important to consult with your insurance company to make sure you have the proper coverage. Keep in mind that the rate will increase.
• Building code and enforcement – check with your local building code and enforcement office to make sure there are no restrictions on your property.
When you decide to rent your home, make sure you screen prospective tenants carefully. Check their rental history, employment history and most importantly, the credit history of all prospective renters. If there is a history of payment delinquency, you may want to move on to other renters.