Vance P. Truman, Attorney at Law
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Can you rent out your house to keep from going into foreclosure?

Your home is going to be foreclosed upon. It hasn't happened yet, but it's probably coming. You know you can no longer afford the mortgage payments. Can you just rent out the house?

This is perhaps not a common tactic, but it's absolutely something people have done. You may be able to keep the lender from taking back the house by letting renters live there.

For example, maybe your mortgage is $1,500 per month, but you can only realistically afford $1,000. You'll eventually lose the house. However, you know you can get at least $1,500 a month by renting out the home. You can then find your own rental apartment that costs $1,000 per month and move out. You take your tenants' rent money, put it toward the mortgage, and use your own income to pay your rent.

Of course, there are downsides. You're not making money, but just breaking even, so you're doing any landlord work for free. You're also now paying to rent a place that's likely not where you'd prefer to live.

However, this may be able to help you get out of a jam, keeping a foreclosure from happening. If things go well, perhaps you'll eventually be able to afford the $1,500 per month again, and you can move back into your own home after the lease ends. You also got the renters to pay off a year of your mortgage for you, so you still gain something even if you didn't earn any extra income -- though you also had to pay your own rent at the new apartment.

This solution isn't right for everyone, for a multitude of reasons, but it's one thing to consider. Be sure you look into all of your options and your legal rights if you think a foreclosure may be in your future, and weigh all options -- including bankruptcy -- carefully.

Source: Forbes, "Accidental Landlords: The Next Real Estate Nightmare or Effective Housing Solutions?," Liz Davidson, accessed April 21, 2017

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