Reeling from the recession’s one-two-three-punch of job woes, climbing mortgage payments and evaporating equity, desperate homeowners are dipping into a nearby income stream to avoid foreclosure: That bedroom just down the hall.
While renting out a room has been around for years, sharing a home in order to save it has become an increasingly popular way to hang on to the front-door keys to the American dream.
Whether they’ve rented out rooms in the past to make ends meet, or a job loss has prompted them to tap into their inner landlord for the first time, many people say their rental income is the only thing keeping them from losing their homes. And for many homeowners—even those whose property is worth less than their loan amount—losing their home is not an acceptable option.
While it’s hard to know precisely how many struggling homeowners have turned to renting out rooms, housing advocates have seen a surge in the past year in the number of people desperate enough to give it a try. Especially among the recently unemployed, rental income—along with family loans—has become a godsend.
At Project Sentinel, where staffers report as many as 20% of their clients becoming landlords under their own roof, counselors are recommending the practice as a way for homeowners to tweak their debt-to-income ratio in order to qualify for a modification.
But a word of caution: becoming a landlord, especially for someone with little or no experience, can bring headaches- from tenants who fail to pay rent to those who are just a pain in the neck to live with.
Often, it’s family members moving in together for shelter from the recession. And all that drama can spell trouble.
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