At Bad Credit Loans, we usually talk about buying a home but sometimes – when you are in a bad debt situation – you may be tempted to sell to pay off those debts. While there are many different options when it come to devising the best plan to help you pay off your debts. One of them that may or not be a viable option is to opt to sell your house, in order to secure the funds you require to pay off all of that bad debt. While it is true that this can be an opportunity to relieve your debt and loans – it is important to consider both the pros and cons associated with a major life changing decision such as this.
Yes, you should sell you house if . . .
If you have a huge mortgage to pay on top of many other bills, then considering selling your home to get out from under that debt may be good course of action for you. You will want to first have your home appraised to see how much it is likely to sell for as well as how much once you have done so, you have left to afford to buy either a smaller home or continue to rent another place of residence.
When you think about it, the bigger your house and property the more expensive in terms of furniture, heating, indoor and outdoor maintenance and so on. Therefore, downsizing to a smaller home with less expenses will mean the more money you can free up each month to also pay off debts and keep your ongoing expenses down as well.
Additionally, home equity loans can be risky too and if you are looking to make this your method of paying down your debts, while remaining in your home – it may in turn better to sell especially if you can not follow through on the home equity loan payments. This unfortunate outcome comes with major ramifications and it can mean the loss of your house in the end anyways. Alternatively, it may be a more secure option to sell your home and utilize the value on your home in this manner instead.
Ultimately, if you are finding your mortgage too high to manage and you don’t have enough equity to help pay down your debts with an equity loan, then contacting a real estate agent who can advise you on the home values in your local market – you can begin on the path to debt relief via the home-selling avenue.
No, you should not sell your house if . .
If you are considering whether or not to sell your home in order to pay down your debts, while this may seem like an effective solution – there may be several important reasons why staying in your current home may be the better choice for you.
With a low mortgage interest rate, and being able to stick to a consistent payment schedule, staying in your home could allow you to opportunity to grow more equity in your home and place you in a better position to earn more when you sell your home in the future.
In addition to your ability to be patient and pay off your mortgage and your debts over time – you may also enjoy many other aspects of your home, including your neighbourhood, your neighbours, the schools, the community, and so on. These elements can all help to make for an overall happy living situation so they should also be weighed in your decision to sell as well.
If your mortgage is currently too high, then perhaps looking to refinance it, instead of selling it, is an option as well. As a result, this could help to reduce your interest payments which could also allow you to pay down more of your debt. However, opting for a longer mortgage term is not necessary the best choice either, as it will mean that you will still be paying more interest over time. Since refinancing can also lower your monthly payments, this process can be of help to you with your ongoing debt-relief plan as well.
Another reason for staying in your home and continuing to pay down your debts, is that you may only end up saving a few hundred dollars extra each month – the same approximate amount that may be saved as a result of refinancing your mortgage, for example. Therefore, this is a definite consideration to factor in as you compare each scenario and determine which opportunity will provide you with the better chance to pay off your debts as well as be the better fit for your lifestyle.
Sell versus Stay?
Selling versus staying really is a personal choice, dependant on your own personal reasons and financial situation. Which fork in the road is the best path for you? Weighing your own circumstances, for example- how much will you save via either decision, while also remembering that getting out of debt is your primary goal and if one method can help you get there – then it my be well- worth pursuing, after all.