+50 votes
by (450 points)
Hey ladies!  I have a financial opportunity that I’d love your opinion on.Hey ladies! I have a financial opportunity that I’d love your opinion on. I bought my first home three years ago when I was 19 for $170, 000. When I did this I had no other debt. After I moved in I had to buy appliances and furniture which I ended up putting on credit cards. I also sold my paid off car and got a 2010 Rav4. I did all of this before I knew about Dave Ramsey. Racked up $23, 000 of consumer debt (including my car. ) and I’ve been on baby step 2 for a while now. This week I found out that I have $95, 000 of equity in my house and I think I’d like to sell it and use that money to pay off my debt and use the rest for a downpayment on a new build in a much more desirable neighborhood. I would be in a newer home, in a nicer neighborhood, with no debt besides my house and I would instantly have equity in my new house. Deal or no deal?  
Hey ladies!  I have a financial opportunity that I’d love your opinion on.

37 Answers

+6 votes
by (7.5k points)
 
Best answer
We are in the process of doing exactly the same thing! we really need the space, as I am pregnant and we are already stretched for space in our small home. We will be walking away with 90k, our realtor is actually giving us a deal because he is not taking his part of the commission for selling our home, but will get commission on the new purchase. So see if you can find a realtor that will give you a deal! We are turning around and paying off debt and putting towards our down payment.  
+18 votes
by (6.8k points)
This really depends. How much is your housing costs going to change? How much longer will you be in house debt with the new house?  
by (6.8k points)
I say deal if you will be able to keep all other costs the same. No deal if any other expenses will increase.  
+12 votes
by (1.8k points)
If you want to move anyway. I'd do it in a heartbeat!  
+32 votes
by (7.4k points)
As long as your new mortgage expenses will not put you in a financial bind or make you house poor go for it. Just remember you lose money off the top for realtor commission when trying to figure out your down-payment and potential new mortgage
+21 votes
by (4.4k points)
So the $95, 000(after selling costs like realtor fees and repairs? ) is going to be the profit after you sell the house? If so that would be awesome and I would absolutely pay off my debt and put down for a new build. With the new build though, be very careful when it comes to picking out loans. Some of the new construction loans require you to have a certain amount of money in the bank until the loan is paid.  
by (4.4k points)
Also with the $95, 000 in equity you have like ~$70, 000 ish left to pay off right? How long would it take you to pay that off and have no mortgage and possibly sell the house for more or rent it out and have straight profit. I believe some banks will give you loans using the equity so you won’t necessarily have to sell that house.  
+21 votes
by (540 points)
Why not just pay off the consumer debt by working thru it. Yes it might take a couple of years depending on your income. Then Save for your emergency fund. Then sell the house and use the money all towards a new home. So you can pay off your new home quicker. Your basically just putting your debt on a house If you do it your way.  
by (450 points)
@mobile because the neighborhood I want to be in won’t be building anymore if I wait
by (4.4k points)
@gillies are you able to buy just the plot? I know some neighborhoods will allow you to buy the plot and build later.  
by (450 points)
@neighbor I will check
by (6.1k points)
@neighbor that is a great idea.  
+6 votes
by (11.6k points)
The other part I'd add would be have a home inspection done on the new build or see if there's one that's move in ready and look at haggling the price. The worst they can say is no; but in a lot of areas, new builds still have margin to come down. A realtor I know just dropped one down several thousand dollars, and his home inspector found things the builder should fix (and it's a very reputable builder in our area). Otherwise, as lost as your output is around the same, I say great!  
+8 votes
by (7k points)
Wow you brought your 1st house when you were 19. Awesome x I am 52 now but we brought our 1st house when we were 18. Way to go xx
+3 votes
by (450 points)
I would do it.  
+32 votes
by (1.2k points)
Have you considered refinancing at a lower rate? If you have equity you may be able to take some money out and pay down some debt. Rates are super low right now.  
by (1.3k points)
@clavichord what do u mean by equity of the house. is it another loan? I dont understand . pls explain. thanks
by (1.2k points)
@fritzfritze you can refinance. So for example if you owe 80k and your house is worth 150k you could refinance your mortgage for 100k and take 20k in cash back (minus closing fees etc) it pays off your original mortgage and now you have a new one. Even a quarter of a interest rate makes a difference. So we are refinancing now and our old rate was 5. 75%. I have 18 years left on that mortgage. We are refinancing for 15 years, getting a small amount of money back and our payment will be about the same. Right now at my bank a 15 year fixed rate is 2. 75, and a 30 year fixed rate is 3. 25.  
by (1.3k points)
@clavichord what bank do u have?  
by (1.2k points)
Northeast Credit Union
by (1.3k points)
@clavichord thanks a lot❤❤❤
+17 votes
by (510 points)
Don’t sell!  
+22 votes
by (1.2k points)
Done deal for me.  
+17 votes
by (12k points)
I’d recommend paying off the debt by working. It might take a few years but you’ll be better off in the long run.  
+7 votes
by (1.2k points)
I say deal
+32 votes
by (2.6k points)
Deal! IF you want to move.  
+19 votes
by (510 points)
Yes! Deal!  
+6 votes
by (2.2k points)
I say deal
+7 votes
by (3.1k points)
Do it! Very exciting!  
+33 votes
by (1.1k points)
Do it!  
+32 votes
by (3.2k points)
If there numbers make sense to move, move if you were planning to move to a better neighborhood anyway. But don't move just to pay off debt. Consider refinancing the house instead if the debt is the main worry.  
+11 votes
by (3.2k points)
Deal! But remember you'll pay for realtor fees when you sell, so you probably won't get a check for $95k.  
+9 votes
by (1.8k points)
Yup, deal!  
+33 votes
by (1.5k points)
Deal great job
+38 votes
by (9.2k points)
Do you actually want to sell and move? It is certainly a good deal but doing the work and getting out of the debt the long way will make you not want to get new debt.  
by (450 points)
@sendal Lol I’ve been working towards being debt free for 2 years now and moving is a lot of work.  
by (9.2k points)
My husband was in the military. Moving sucks. I wouldn't want to take on a LOT of debt for a longer amount of time by buying a house to pay off a smaller amount of debt UNLESS I was already planning on moving anyway.  
+26 votes
by (1.9k points)
Do you want to move from your current home? If you would prefer to stay you could do a cash out refinance to cover your debts.  
by (450 points)
@alis819 I don’t want to stay, and Dave Ramsey doesn’t recommend doing that
by (1.9k points)
@gillies Sounds like you already have your answer/made up your mind. I'd say talk to a realtor and see how much you'd actually net after commission and fees + putting a sizable down payment on the new build. plus all the extras of that like buying new appliances and possibly saving money for landscaping (if it's not provided with the new build).  
+37 votes
by (620 points)
Well would you have to buy appliances and such for that new house too? Or would you use part of the remainder of the 95k to pay for them? You don’t want to pay off your debt just to get into more haha
by (450 points)
@augustus484 no they’re included in the home cost.  
by (620 points)
@gillies ok sweet  sounds like an awesome deal. How much more life does your car have? Are you planning on getting a new one?  
+27 votes
by (1.3k points)
I would make sure that you have a realtor draw up the estimate sheets based on different sale prices so you know if it’s realistic or not after all fees involved as the seller of a property. If all of that aligns, I would definitely say do it! Moving is a lot of work though.  
by (450 points)
@slippage I declutter often, so I don’t have TOO much stuff!  
by (1.3k points)
@gillies I declutter often too (once a quarter)! You just don’t realize how much stuff you have! We moved last June. Needed more space for our family after our surprise twins arrived. Sold our 1500sqft and magically filled a 2800sqft house with ease.  When the movers came with our stuff I couldn’t believe how much stuff we still had! I had purged a ton (we rented a dumpster it was so much stuff) when we were getting the house ready to list and even more while we boxed up nonessential items.  Good luck to you!  
+11 votes
by (2.1k points)
Deal. If you are armed and confident with what you know now then go for it! I mean, we do this to learn and make smart choices. There is nothing wrong with an upgrade you can afford with the knowledge you now have. Enjoy!  
+39 votes
by (5.6k points)
Sounds good to me
+27 votes
by (890 points)
I think you should contact a realtor and find out what the housing market looks like right now and what you would be looking at getting. 95k equity does not mean you would be getting that obviously. I'm in Canada and I realise it's a completely different market but right now because of the economy it's a buyer's market and houses are selling for waaaaay less than they're worth (in most places). Would it be worth selling if you're only getting $40-75k?  
by (450 points)
@schoolmate my realtor is the one who gave me that number.  
by (890 points)
@gillies it all depends on how much someone will buy it for right.  
by (450 points)
@schoolmate yep.  
+33 votes
by (410 points)
Deal especially now with the interest rates being at an all time low
+14 votes
by (1.1k points)
You have $95k of equity based off a desired selling price. That doesn’t mean you’ll get that especially right now with the current market. And honestly, all you’d be doing is robbing Peter to pay Paul. You aren’t learning the lesson of your actions (going into debt) which is what Dave Ramsey preaches. I wouldn’t do it and this is coming from someone who’s done it and still went back into debt. I would stay where you are and work the program.  
+5 votes
by (1.7k points)
Do it and bravo for buying a house so young!  
+27 votes
by (430 points)
I would consider refinancing and consolidate debt before you pay a realtor 6%
+19 votes
by (440 points)
Deaaaaaal  
+16 votes
by (6.7k points)
Sounds good !  
+32 votes
by (1.3k points)
I’m pretty conservative in my financial decisions but I would go for it. This just makes sense to me.  
The Budgeting For Moms Group is where you can always find questions, answers, advice, reviews & recommendations from other community members about mothers making smart financial decisions and budget goals.
...