Times are tough, and when times are tough, people have to make tough choices. Countless people throughout the nation are struggling with difficult decisions at this very moment. Many of them are thinking about selling their home to solve the problem. Should I sell my house to get myself out of debt? You’re about to find out; let’s jump in!
If you are staring down the barrel of imminent financial doom and thinking about selling your house to pay off your debts, you’re not alone. There are thousands of people across the Midwest and the nation who are facing the same tough choice that you are currently contemplating.
Whether you are sitting on a mountain of credit card debt, behind on mortgage payments, or thinking it would be best to downsize and consolidate your debt into a more manageable amount, there are some crucial factors to consider.
For those of you who have gotten yourself into quite a pickle, and are unsure of how to get out of it, read on. The following tips can help you settle on a course of action that will solve your problem without damaging your pride.
Work Out Why You Are In Debt
When thinking about selling your house to get out of debt, the first thing that you should do is to work out why and how you have debt. People get into debt in many different ways. Before you can decide on the best way to dig yourself out of it, you have to figure out how you got into this hole in the first place.
A lot of folks wind up losing their homes after overleveraging themselves with credit card debt and falling behind on mortgage payments. Some folks get caught up in the race for a college degree and take out more student loans than they can handle. Student loans have driven countless people out of their homes.
Then again, many others take out loans for vehicles that they are not able to afford. Others still find themselves in a deep dark hole after leveraging all their available credit and savings to put a kid through college.
Regardless of how you got here, something needs to give. That something might be your home. If you want to do it, take a look at some alternative ways to sell a house. Of course, if your home has seen better days in terms of the condition of the property, you will want to focus on learning how to sell a house as-is for cash.
Should you sell your house to pay off your debt? In most cases, that will be the best way to go when you have an insurmountable pile of debt on your hands. That said, you will need to calculate if it is financially worthwhile to sell your house or not. You will also need to assess the risks of selling your home to cover a debt.
Many homeowners get stuck with a high-interest rate that can make closing costs even more painful.
When selling your house to get out of debt, you’ll need to work on your credit score. If you leave your credit score by the wayside after selling your home to cover a debt, you’ll find it difficult to find a lender that’s willing to work with you.
Calculate if It is Financially Worthwhile to Sell Your House
The next step is to calculate if selling your house is financially worthwhile. For example, if you only owe $20,000 between all of your debts combined and your home is worth $250,000, you are fine. On the other hand, if you have racked up $90,000 of debt and your home is worth $100,000, you’ve reached your limit, and the time to sell is now.
Will You Make Profit?
The next question you will need to ask yourself is if you will make a profit. If profit is not achievable, you need to at least break even and get rid of the debt before it follows you to your next residence.
Aside from comparing your debt to the value of your home, there will be another factor to consider. The place you live can also determine whether you can make a profit on the sale of your home when you are deep in debt or not. If you want someone to buy your house in Brookfield for example, you are in for a treat; chances are you can get a great deal!
To figure out whether you will make a profit, you must examine the market value of your home versus the real estate market. If you have enough home equity and you can fetch the right sale price, you could make a modest profit.
Are You Ready to Move Out?
Are you ready to move out? If you have missed one or two payments and are close to foreclosure, you should be ready to move out. Many folks wind up in a jam after waiting too long to pack up and mobilize. You will not want to find yourself on the street with only a few hours to collect your belongings.
Risks of Selling a House to Cover Debt
So what are the risks of selling a house to cover your debt? Most of the dangers are subjective ones, meaning the financial stakes are pretty minimal. You would have more to lose by not selling your house to cover a debt, than covering the debt in other ways.
When you sell your house to cover a debt, you might have to downsize, or possibly have to rent. That would be better than not having a place to live at all, right? That is the mindset you have to embrace if you want to come out of this type of situation.
Emotional Attachment to Your Family Home
One of the factors that people selling their house to cover a debt struggle with the most is the emotional attachment to your family home. It is natural for folks to develop a strong emotional attachment to their family home.
This is where you have to be 100% honest with yourself. Can you afford to stay in the family home or can you not? If you know that you are not able to afford it, you have to keep a stiff upper lip and remember, it’s not about the family home, it’s about the family.
You have to do what is best for your family and sticking it out in vain just to receive a foreclosure notice is not what will be best for your family. Selling the family home will sting, that is for sure, but what you must remember is that it will not sting as badly as getting kicked out by your creditor.
Could be Harder to Buy a House in the Future
Although selling your house to pay off a large amount of debt is a viable solution, it could be harder to buy a house in the future. The best thing you can do for yourself after selling your house to cover your debt is to try downsizing to something more affordable and keep paying your bills on time.
By paying your bills on time and rebuilding your credit, you can leverage your fiscal responsibility to increase your chances of being able to buy another home in the future. All of this is about timing. Thinking of it as one step forward and two steps back isn’t the right mindset. One step back and two steps forward is where you want to be.
Downsizing Is not Always Fun
Downsizing does not sound like fun to most people, but it can be! Think about all of the time you had to put in for maintenance. Maintaining a home takes a lot of work. All of that work adds up to a lot of Saturdays and Sundays spent taking care of things in the yard and around the house.
When you downsize, you will have less to be responsible for. Sometimes taking on less responsibility can feel liberating. You will end up with more time to spend with your family and friends; plus, you are not going to be tired all the time anymore.
Depending on your debt situation, you might now have enough money to raise a down payment for another home right away. The whole point of selling your home is to become debt-free and start enjoying the benefits of financial freedom, which is why it might be better to rent a home after selling your old one, at least for a while.
Moving to Rental May Hurt Your Ego
While it is true that moving to a rental may hurt your ego, odds are your ego would be even more damaged if you lost everything. Although having to sell your house and move into a rental to cover a debt can hurt your ego, losing it all can annihilate your ego entirely.
Losing your house can be hard to come back from, many people will not bounce back at all. A foreclosure could leave you feeling like a shell of your former self, and it could lead to divorce. Buck up and sell the house; once you start renting and saving money again, you will be just fine.
Should You Sell Your House to Pay off Your Debt?
Should I sell my house to get out of debt? If you can not hold on any longer and the debt is creeping up to an amount that’s more or the same as the value of your home, you need to sell while you still can before you get the boot.
For those of you living in the Midwest, you will be glad to know that you have some options. Check out cash home buyers in Milwaukee to get a feel for how it works. If you live in Wisconsin, take a look at companies that buy houses in Wisconsin.
Cream City Home Buyers
Now that you know more about selling your house to get out of debt, it is time to make the call. Cream City Home Buyers has built a solid reputation for helping folks get out of a jam by buying their homes for generous prices.
We understand that times can be tough on folks, which is why we work so hard to help them out. Once you get in touch with us, we can get the ball rolling and present you with an accurate figure on how much you can expect to get for your house.
Once you sell, you will be free of your debts and all of the troubles that came with them. Remember, selling your house now does not eliminate your chances to buy your own home in the future. We trust you will make the right decision.
Do not wait until it is too late, pick up the phone, and give Cream City Home Buyers a call today!