Question for the financially savvy folk

Currently live in a home that's over an hour commute to work, bigger issue is my son who I have shared custody with is a minimum 45 minute drive to school and sports half the week ontop of that, so wife and I would like to move. We will most likely have money gained from sale of our house, it is valued at 60k over what we owe. We also both have debt that I feel would be best to not carry into another higher mortgage home. So the big question is if we make a good chunk of money, is it best to just pay the tax on it and throw the money at our existing debt while we say look to rent temporarily in my sons school district? Or is this retarded and that money should be used to put towards a purchase of another home when we are ready to buy? I'm ready for the shitload of driving miles to stop and just go rent somewhere since I don't think we are in a position to buy what we want yet....

What would Dave Ramsey do.... Pay off the debt.

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If you haven't paid the debt off with your current mortgage you probably aren't going to pay it off with a higher mortgage. I'd pay the debt off, rent, and possibly even get lucky and time the housing market to where you're ready to buy in the next downturn. 

What could your house get in rent? 

KeezyDoesIt -

What could your house get in rent? 

We can probably make 300/month over our mortgage if we rent it out, we did this a few years ago and didn't have a very good experience with renters not taking care of our house and rent checks not coming in time so I think that idea again is out the window.

Peter Puffer -

What would Dave Ramsey do.... Pay off the debt.

Been reading about this guy, I like this 

Eskimo -

If you haven't paid the debt off with your current mortgage you probably aren't going to pay it off with a higher mortgage. I'd pay the debt off, rent, and possibly even get lucky and time the housing market to where you're ready to buy in the next downturn. 

That's the idea I was leaning towards, the idea of having a big down payment sounds good to the wife....... buttttttttt I still will be carrying these BS credit card and loan payments.... don't like those payments if I could have a chunk to pay em and then save for the payment while renting 

The gain won't be taxed. Don't rent unless it's going to be wayyy below your mortgage. I say sell. Pay off debt. Learn. Buy. 

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Lots of factors here. How much is your debt and what interest rate?  How much are you spending on travel? Not just gas and vehicle costs, but your time as well?  What is the difference in rent in the new local vs your current housing expenses?

 

that being said - debt is the problem.  You shouldn't have any of it.  Possibly excluding house debt if the cost of your housing (including taxes and repairs) and interest minus the asset appreciation is less than what you could make in other investments.

 

without knowing all of the specifics, generally you should pay off all your high interest debt. High interest being anything that has an interest rate higher than your mortgage.  Since you have equity built into your home, you should refinance your house to tap that equity to eliminate your other debts. THEN - and this is key, you should save the difference in your old va new debt payments and NEVER USE DEBT AGAIN.  Budget and pay cash.  Soon, you will have a nice nest egg rebuilt, be out of debt except a mortgage payment, and (if your house continues to appreciate) have more equity built into your home. 

 

If you must must move now, you should use your equity to pay off all your debt, then buy what you can afford (which will be more since you're debt free) with what's left as a down payment or rent. 

ltlurker -

Lots of factors here. How much is your debt and what interest rate?  How much are you spending on travel? Not just gas and vehicle costs, but your time as well?  What is the difference in rent in the new local vs your current housing expenses?

 

that being said - debt is the problem.  You shouldn't have any of it.  Possibly excluding house debt if the cost of your housing (including taxes and repairs) and interest minus the asset appreciation is less than what you could make in other investments.

 

without knowing all of the specifics, generally you should pay off all your high interest debt. High interest being anything that has an interest rate higher than your mortgage.  Since you have equity built into your home, you should refinance your house to tap that equity to eliminate your other debts. THEN - and this is key, you should save the difference in your old va new debt payments and NEVER USE DEBT AGAIN.  Budget and pay cash.  Soon, you will have a nice nest egg rebuilt, be out of debt except a mortgage payment, and (if your house continues to appreciate) have more equity built into your home. 

 

If you must must move now, you should use your equity to pay off all your debt, then buy what you can afford (which will be more since you're debt free) with what's left as a down payment or rent. 

Thanks for input, I'm currently around 7500 credit card debt at 18% and a personal loan at 19k at 11%, rent will most likely cost us around 1500 a month to live north where we want vs our current mortgage of 930, biggest issue for us currently is the time it takes for us transporting my son to and from school and sports, fuel wise I bought a beater so it might add 30 a week onto those costs, but time is huge, adding 1.5 hrs driving each day when we have him half the week. We financed with a USDA rural development loan which was no money down and I found out does not let you tap into your equity unless you refinance into a loan that requires money down. I know optimally I should just shut up and stay put while catching up on debt but I'm having some baby mama issues that are starting to come into play where if I lived in his school district I could eliminate, and that had brought my questions.

What's the cost difference between where you live and where you want to move?  How big is the difference between average home prices?

 

Also is your work commute going to increase if you move?

If you sold your house, paid off your debt,  and rented you'd have 30k in the bank and your monthly housing cost would only increase about 250$.  Not including what you save in travel expenses and time, so lower that amount by whatever you value those at. 

1500$ rent is probably not much more than your 930$ mortgage cost now in absolute home value.  So you could probably buy  a similar home near there for about the same cost, maybe a bit more, assuming 30k is enough for a down payment.  Key is to stay out of debt going forward. 

Yea the big issue is the difference in renting and buying, where I am now I bought for 155k, up north where I would cut 40 miles off of my commute houses are 300k+, which I why I was thinking rent for some time while preparing to buy.

You bought a house for 155k? That's awesome .

   I live in California ......... you don't see that a whole lot around here. And there's nothing fancy about a 500k house.....

Ok.  Rough numbers.  You sell your house and take 60k profit.  Pay off all your debt. Left with 30k.  Put all into downpayment and buy 300k home with 270k mortgage.

 

ignoring pmi and taxes, and assuming insurance is roughly the same, you can get a mortgage for that amount with good credit for less that 1300$/month.  Which is about what you're paying now including home and other debt servicing.  Remember now you have no debt ( and won't add anymore). This is doable.  You may be tight for a while, maybe need to save some money elsewhere, but (if you and the wife avoid any more debt) definitely doable.

ttt

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rustyshakleford -

You bought a house for 155k? That's awesome .

   I live in California ......... you don't see that a whole lot around here. And there's nothing fancy about a 500k house.....

Yep main kicker with where I purchased is it's a long ass drive to get to the city where i work, so to go up 40 miles closer which puts me about 25 mi from city they are all double the price to start.

I usually pay cash for everything, but when younger i always thought you cud leverage your equity in existing for a new place!?!