For homeowners, RV life may be the solution to downsizing and money conservation. However, before you start saving, you have to determine how you will afford the initial investment of your new home on wheels. After all, purchasing an RV and renovating it can be the most costly expenses. Thankfully, there are plenty of ways to finance your new lifestyle.
Here are just a few options for current homeowners:
Sell Your Home
If you’re planning to live in an RV full-time, it’s unlikely that you will hang on to your current home. Realistically, you won’t really be able to experience the cost-saving benefits of RV life if you’re paying bills for both your RV and traditional home. If you really want to conserve money while on the road and finance your camper before hitting the road, it’s wise to consider selling your house. You can use the money you earn from selling your home to fund your RV and necessary or elective renovations. If you choose to go this route, you should have an idea in mind of how much money you will actually need to finance your RV lifestyle. Every RVer is different. Some are simplistic while others are more extravagant. Be honest with yourself as you determine how much you will really need to get started on your nomadic journey. Knowing your budget is so important because you don’t get to keep every penny earned from selling your home. How much money you can keep depends on a number of factors including, how much you still owe on the home, your selling price, realtor commission, and other fees. To calculate your proceeds add up the cost of selling and subtract that amount from the final sale price.
Before you put your house on the market, you should seriously consider whether you are fully committed to living in your RV for the long haul. If for any reason you think that you may need to take a break from RV life and move back into your home, consider some other options for financing RV life.
Rent Out Your Home
While selling your home can be a great way to provide the money you need to purchase your RV, renting out your home can be advantageous for funding RV renovations. This is a great option for those who want to customize their rig over time, rather than all at once. Instead of the lump sum you would earn from selling your house, you can consistently make money that can be used to beautify your home on wheels. Additionally, this finance option can provide income while you are on the road.
Similarly to selling your home, be sure you determine how much money you’ll need for your RV in order to set a rent price. In addition, it’s important to find the right occupants. Your tenants can really make or break your landlord experience. Renting to your close friends and relatives can easily take a turn for the worse. However, leasing to strangers has its challenges, too. Selecting the right people is about more than just who can pay the most. Remember, you will be partially, if not fully reliant on this money, so the tenant’s stability is important. Before you list your home, create a list of criteria for potential renters. Even though you won’t be living in the home anymore, it’s still yours and you want it to be taken care of. Furthermore, you want being a landlord to enhance your RV life experience, not complicate it.
Before you rent out your home, carefully consider whether or not you want to take on the responsibility of being a landlord. There are laws in place that prohibit property owners from neglecting their tenants. In addition to being familiar with state laws for landlords, there are several other factors you need to consider before taking on this role, especially if you plan to be on the road often.
Take Out a Home Equity Loan
In addition to selling or renting your house, homeowners have another financing option at their disposal — home equity loans. Perhaps, you’ve heard the term home equity, but don’t have a clear understanding of what it is and how you can benefit from a home equity loan. Home equity is the difference between what your house is currently worth and how much you owe on your mortgage. Put simply, it’s how much mortgage you’ve already paid. If you’ve paid your mortgage on time every month since you bought your home, you have some equity already in place. To take advantage of the equity you’ve built, you can take out a loan, which typically has a lower interest rate than a personal loan.
Before you set your heart on this type of loan, you need to figure out how much equity you have built. To do that, simply calculate or inquire about how much you’ve paid on your mortgage. If you’ve owned a home for quite some time, perhaps you’ve built a decent amount of equity — but not so fast! The amount of equity you’ve built is not the amount you will be approved for with a loan. Typically, you will be approved for a loan amount that is equal to a portion, not the full amount, of the equity you’ve built. Next, you should determine how much money you will need to purchase your RV and any renovations. This is really important because you will be expected to pay back whatever amount you are approved for, not only what you spend. Granted, you can always use whatever is leftover to upgrade your home in preparation to sell or rent it before you transition to RV life. In either case, the loan should pay for itself, which is always a plus!
Saying goodbye to your traditional home will be a bittersweet experience, but with these options for getting started, you will be well on your way to affording your dream RV. Remember to be honest with yourself, count the cost and research your options. Talk with other RVers about how they were able to join the RV life. You can even become a host and have RVers come to you!