If the year 2020 has taught us anything, it is that we live in an unpredictable world, and while things might be going great for a while, we never know when we will hit a pitfall. If you are currently facing a financial setback, know that you are not alone. However, steps must be taken to get back on your feet, and sometimes, that may mean selling your home and relocating elsewhere.
However, moving in troubling times can be difficult, especially if your credit and cash flow have been affected for a while now. But that doesn’t mean that relocation is impossible. Let’s take a look at a few ways that you can manage the process without too much stress.
Credit, Bankruptcy, and Your Options
If you have been dealing with a financial setback that has been causing issues for a while now, then it is likely that your credit score has suffered. In order to even consider buying a new house, you will need a credit score that is over 500, and even with a score that low, you will only be able to get a loan insured by the Federal Housing Administration, and that may not be enough to buy the home you need. Still, it is an option.
Ideally, you will want to have a credit score above 700. It may seem daunting, but you can raise your credit score over time. If you think that your score is lower than it should be, then get a copy of your credit report and tell the credit agency about any errors you find. If you know the low score is legitimate, then you can begin to rebuild your credit by creating a budget and ensuring that at least minimum payments are made on a monthly basis.
Those in especially dire straits may have to consider filing for bankruptcy. While not the best scenario, bankruptcy is not always the mark of death that some can make it out to be. This is just a way of getting some leniency while you get your affairs in order. There are several different types of bankruptcy depending on your situation. The most common will be Chapter 7, which means that your assets are liquidated to pay off your creditors, and remaining debts are erased. There is also Chapter 13, which reorganizes your debt and allows you a chance to repay what you owe.
Since you are planning to relocate, you will need to be strategic about bankruptcy. For Chapter 7, you won’t be able to buy a house for at least three years after your case is dismissed. You have a chance for a new home sooner after Chapter 13, but in order to get a substantial loan, like those through USDA (United States Department of Agriculture), you will need to wait a year.
Selling Your Current Home
If you are experiencing a financial setback due to the loss of a job, then you will likely be looking for your next opportunity, and it may not be in the same town. If a new job is too good to pass up and time is of the essence, then you may have to consider selling your home for cash. A cash offer takes out the financing and makes the transaction easier by selling your home with funds transferred electronically or in the form of a cashier’s check. In many cases, you could be selling to a real estate investor who may accept the home “as is” so they can repurpose it, which may create less work on your end.
There are a couple of considerations to keep in mind when selling your home for cash. You will still want to use a real estate agent because they can expedite the process and make sure that everything goes through accordingly. You will also want to ensure that you are getting a good deal by understanding the value of your home. You can have your agent complete a comparative analysis, or you can use resources found online.
In the unfortunate situation that you end up selling your home for a loss, you may be able to recuperate your moving expenses. Per the IRS, if you are moving due to employment, you may be able to deduct your moving expenses. However, the new residence must be 50 miles closer to the new job than your old home. In this case, expenses can include gas mileage, truck rental, and the cost of boxes.
Tips for Relocating
While you are in the process of selling your home, you will want to start thinking about where you will be relocating and the details of the new area. If you have dealt with a financial setback, then you likely will not want to move to a new city with higher taxes, so research the rate at potential landing spots now. Also, the cost of living may be higher. A cost of living calculator can be invaluable in this situation. Do your research, so you aren’t surprised.
If you haven’t found a new job yet, but you are considering moving near family until you get back on your feet, do some digging regarding the towns in the area and see if they have jobs that match your expertise and start applying for them now. The best-case scenario is to have a job before you move, so you have a safety net.
Plan ahead so you can save money during the move. The odds are that you don’t need to move every item you own, so have a garage sale ahead of time and try to make some cash by selling things that don’t need to go with you. Hiring professional movers can be especially expensive, so consider either packing or driving the moving truck yourself. Some moving companies, like U-Haul, even have listings for affordable movers that you can review and hire for a fraction of the price.
No one wants to experience a financial setback, but life has a way of throwing us curveballs. Just know that by taking a step back and looking at your options, you can move on and find success again.
We hope you found this blog post Tips for Relocating After a Financial Setback useful. Be sure to check out our post Short, Smart Tips for Your Long Distance Move for more great tips!
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