[USER]

Random crazy sounding but serious question, and not sure at all how smart this may be, I really don’t know, so please be kind.

I have noticed lately that if I were to sell my home, I could make a great amount of money.

The equity plus the increase in value gives me quite a bit to profit based on today’s going market values.

That said… has anyone ever considered/ recommended possibly selling a home, then using the money to pay off student loans, credit card balances, a car loan, and then set aside parts of it for expenses I know are coming up?

I was thinking I would then find a rental in a school zone I am interested in for my child to attend middle school/ high school, and then maybe once they graduate I could possibly look at purchasing a home again?

Or purchase in a desired zone with a smaller down payment.

Is this a foolish idea, or one that could allow me to pay off some big debts, move into a school zone I approve of, and rearrange a current budget that is now debt free to meet bigger goals like savings, college funds for child, and retirement?

On paper, it sounds good… but maybe I am missing something big here? Thoughts?

[Valerie]

You are basically “robbing Peter to pay Paul.” I knew someone who did this years ago and ended up far poorer, then having to pay apartment costs and unable to re-enter the housing market.

In addition, paying off the bills did not solve her problem of not being able to manage money.

I think it’s a very poor idea.

[Stacey]

I sympathize with your situation but selling your house will take a good asset (home) and throw it at a bad asset (debt). I do not recommend that.

As one who had to rent part of a house after divorce then finally am renting on own after four years, renting is not as easy as you think.

Nor is finding a good rental. Having a roof over your head in this day and age is huge. And school district options will increase the rental costs.

I owned a home in 2007. I have not been able YET to get a home ownership again. Life happened. Divorce happened. Health happened. Think good and hard.

Are YOU willing to rent for 20 years? I know you might live in a cheaper state than me. You might be younger than me.

But we never ever know what life will throw at us, no matter how we plan. And costs are going up.

Now if you could sell your house, pay off debt and downsize your home to a better location by BUYING a smaller home, that would seem better.

I am not trying to discourage you but just being real. Be very very cautious about thinking renting is going to be cheaper than the mortgage.

[Eva]

Where are you going to live? You need a good house more than anything, shelter is a very basic human need.

[Carolyn]

I’m older than you but what’s stopping me from downsizing is capital gains, plus real estate commissions to list the home & closing fees on the other end to get into a new one.

You need to consider moving costs also.

I would rather leave that money in equity to my kids someday rather than just moving around.

I do understand the urgency to pay off debt. I would suggest taking a hard look at your budget and seeing how you might streamline it.

If you have been managing to pay everything so far I wouldn’t jeopardize the security of your home.

[Carolyn]

I have thought something similar so to me it makes sense especially if the school zone is important and you don’t go back in debt for anything other than a house.

[Amanda]

So many factors to consider here. What is your monthly mortgage payment and what would it cost monthly to get into a rental?

What is your income to allow to continue to save to have a new downpayment?

I believe currently it is much smarter to own then rent, but if you are at a higher interest rate that might not be the case.

[Elizabeth]

Why do you want to pay your landlord’s mortgage? Pay your own.

[Brian]

The simple answer is that selling your house to pay off the student loans and other debt is not a good idea. You currently have an appreciating asset with a 4% interest rate.

The debt you would be paying off is not high interest like a credit card.

The rent would most likely be similar if not more than your current mortgage, and when you eventually go to buy a place again, prices will be even higher than they currently are with an interest rate higher than 4%.

[Megan]

Have you looked at the rental rates on school zones you are interested in? Just ad your property value has gone up, so has everyone else’s.

If your young enough to have children, its unlikely this will be a better deal for you simply based on rental rates.

You’ll sell your home to pay more than what your paying now for mortgage and lose all that equity.

You’ll also lose mortgage deductions on your taxes and have to pay capital gains taxes.

[Stephanie]

You’d definitely want to research capital gains taxes before making a decision.

[Gail]

Without thinking it all the way through in this moment, I wouldn’t completely rule it out.

I have done what I would consider big financial things that conventional wisdom would typically NOT advise and they’ve turned out really well.

Conventional wisdom is good to consider, but it doesn’t always apply in every specific situation.

My initial suggestion would be that you “Math” it out on paper, in two columns next to each other, with realistic numbers, including the cost associated with each option; for example the tax consequences of selling your house, if any, deposits on an apartment, etc, how much rent would cost compared to how much interest, insurance and property taxes, and maintenance you’re currently paying per month on your mortgage, what you will pay in total in interest over the remainder of your mortgage (and that’s a big one!) and much more.

You really want to think every aspect through because it would be super annoying if you overlooked some aspect that ended up costing you unexpectedly because you didn’t think about it

This is a scenario where you would have to apply your own numbers and make sure that you have considered EVERY aspect of the two scenarios in order to compare them.

That would include what you are giving up financially compared to what you are gaining.

There is also the intangible aspect (to which you have referred) and that is the possible opportunities for a better school district for your child and what that could mean to his life

You’re really looking at a decision that will have long-term ramifications here, so you want to take your time and be thorough

[Susan]

I think you need to gather information way more information. Anything I’m suggesting here is just thinking outside the box.

First is everyone in the house on board with school change?
Does your husband and you both truly have the same respect and opinion on investment risk?

Do you have access to a trusted lawyer and financial advisor?
Have you checked into rental properties and pricing in the area you want to move. Here where I’m at rentals are hard to find and expensive.

Do you have personal knowledge that the new school district is right for your child the grass isn’t always greener.

Do you know current value of your home? There is a difference in that number for banking purposes versus listing price.

Speak extensively with a tax advisor on the long term effect on your taxes in terms of loosing not having a home.

Ask financial advisor what strategy they would use to invest and reduce debt based on facts and best financial outcome.

Do you have a sense of where this question of is coming from in terms of this thought/plan?

Is it based on emotions ie: tired of being buried in debt no end in sight? Or thinking about how best to capitalize on the housing market?

I know ots alot and a commenter said earlier lay out several options and one should reveal itself to you both.

This very well maybe the most compromising event you both have had to make with each other I don’t know but I do know from experience that you mix a home and risk investments between two people there will be differing opinions.

My daughter and her husband did something similar. There was many great points alot of nerves and second guessing. Not sure they would do it again but maybe.

Now three years later two young daughters the house they sold is what they need.

The house they are in now after living in a beautiful 95K fifth wheel RV for those 8 months is too small. So, they are remodeling the current house hoping to make a profit to buy where and what they want.

They are learning to not be attached to a home until later in life.

Sick of student debt and car payments so we think this next time around they will not buy a large house like their first but property and a house in the country.

Pay cash for a used car and get out of the car payment cycle no need to impress anyone.

And tackle student debt (60k) after that. She will finish her masters this month and her employer is helping with some of the debt and she is getting a raise.

So, life is going forward. We are proud of them.
My point to all of this is there are many important questions to find answers for. I wish you the best of luck on what you decide.

PM me if you want to pick my brain. Not this week though I’m a floral designer and it Valentines week!! Lol..

[Loretta]

I was a single mom back in the day. Keep your home you own now. You will thank your older self later.

You might not have that opportunity to buy a new home in the future with the rising costs going up.

[Marsha]

I can see selling and buying a cheaper house you can see yourself living in long term. But to give up that home equity entirely I would not recommend.

We stayed in our house, payed it off, retired now with no debt, and I can say it’s a good place to be in.

Knowing we have the home equity to fall back on if need be, is comforting. Our goal is to have the sale of the home help our kids some day.

I’d hate to rent forever.

It all depends where you live too. Good luck. Get lots of opinions before you leap.

[Gerri]

“They” are expecting the housing market to go down. So, it’s possible you could sell now, high, and buy later at a lower price. But then again might not work.

What area do you live in now? Last summer we sold our very average house in California, then moved to a small town in Texas where we paid cash for a much nicer one.

Being a small town we don’t drive an hour to get to things and gas is half the price anyway! So, it worked for us.

We’re in a nice, pretty safe, neighborhood, but not a fancy one. We moved near family, but our kids are grown so school district didn’t matter.

They’re ok here. Your kids WOULD change schools and be unhappy, but family life would be better without debt.

Rents probably seem to only go up. Unless you were in unusual situation I wouldn’t do that. My daughter also in California, has been renting a very nice comfortable house for several years.

The owners decided to sell last week so they’ll have to move in April when their lease is up.

It will be difficult for them. If they had kids, it would be hard on those to move a month before end of school year! But those things happen.

And having pets makes it more difficult to find a place to rent.

[Marybeth]

You sound very focused and disciplined. So, I’d suggest you either stay in your current home and bust your buns to pay off those pesky debts.

Or fix up your current home (get advice on what to repair/update from several realtors) to get the highest sale price.

Then find a home in the preferred school district. Look for a place that has been on the market for a while and needs some love. Fix it up, sell it, repeat.

I took a $14,000 beat up but sound house (yes, this was a very long time ago), flipped it for an $88,000 house, flipped it for a $180,000 house, flipped it for a $260,000 house and kept going.

I always lived in the houses, to avoid double monthly payments. It was fun to see my ideas come to life!

Then I built my current home and shocked the contractor and his subs when I would speak “construction.” That was fun!

[Shelley]

Sounds like you are in a desirable area and keeping the house could be really beneficial in the ling run. However…. being debt free is a huge mental relief and could be totally worth it for you.

If you do sell, I would suggest buying something within your means asap. Use the excess as your down payment.

It sounds like the school district you want to go to is also much better. That could also be a good reason to sell/move.

As long as you don’t foolishly blow the money you made, id support the decision to sell and move.

[Kristi]

In my opinion, the only way I would do that is to downsize to a less expensive house. Trading owning for renting is crazy to me.

We sold our first house in 2015 and moved to a smaller house in a cheaper area.

Doing this allowed us to pay off our first house and to buy our next place with cash.

So, no house payment. We used the extra money for improvements, but if we had debt, we would definitely have used it for that.

Renting in our area would take a good 40% of our current income. And it’s something you can’t control the price of.

[Regina]

I would only sell my home to move into a smaller home in the area I want. Take the extra money and put that towards student loans.

Your other debt can be paid off eventually if you get extra income and use a zero budget for living.

I would not take all that money and pay everything off and be homeless.

If the house is too much, get a house you can afford in the area you want. Rentals are expensive and I think would cost more than a mortgage payment.

With rentals, you never know when they’ll ask you to leave, which does happen, then you have a short amount of time to find another, which is usually more cause you’re in a pinch.

Altho rentals don’t come with home repairs, so you’d save there. But I get the feeling if you sell and don’t buy, you probably will never get enuf to buy again.

Either way, you’ll never get out of debt if you don’t learn to budget and stick to it. Checkout Dave Ramsey zero budget.

I’d start there. It’s tough, but it can be done. Whatever you decide- Good luck!

[Lucinda]

Near me, you might sell your big house for $800k, but there is virtually nothing small under $500k in our school district.

And a 2-bedroom rental would likely be $2.5k.

I would research your real estate market first.

[Julie]

Prices have increased drastically on renting and buying a house. Much if not all of your profit would go to getting into a home similar to what you have.

Also, the more you pay for a home the higher your taxes and insurance will be.

[Author]

Posts