Do you have too much debt due to student loans, credit card payments, car loans, or even a few gambling mistakes? If so, you may want to consider trying to sell your house to pay off debt. If you have too many loans to pay back and your mortgage is too large, you can speak with a financial expert to learn ways to pay back your loans and potentially sell your house to pay off debt.
Should you sell your house to get out of debt? Possibly. Below, we have gathered information about the reasons to sell your place. How much you can make selling your property, and the potential risks of selling your house to get out of debt.
Keep reading to learn whether you should sell your house to pay off debt or if you’re better off without selling.
Why People Sell Their House to Pay off Debt
There are numerous reasons why people would sell their homes to pay off loans or huge credit card debt. For example, even your mortgage payments may be too large and you would benefit from downsizing your place. Renting an apartment with a smaller monthly payment may make it easier for you to gain some financial freedom.
Another option to think about if your mortgage payments are too big is to refinance your mortgage before you end up facing foreclosure. Speak with a financial advisor to find out what option is best for you.
Furthermore, you may be interested in moving to another state with a lower cost of living. If you found a new job in a different state, then you’ll need to sell your home, which can also help you to potentially become debt-free.
Numerous emergencies may come up, such as medical costs due to surgery or a hospital stay. In these cases, you may have medical debt that you could pay off by selling your home.
If you have a gigantic amount of credit card debt, you’ll benefit from credit counseling help and potentially selling your property to cover this debt.
Mortgage Too Big
If you have bought a house that is out of your budget or the down payment was so large that you don’t have any savings left, then you might end up paying more than 30 percent of your income toward your mortgage. Your monthly mortgage payments may be too big for you to handle.
In this case, you may need to sell your house to pay off your mortgage and gain more financial freedom.
Selling your house can help you gather enough money to pay off other loans as well. However, if you own the home with a spouse or other family member, then you’ll need to discuss whether home selling is best for the both of you.
There are several things you’ll need to consider before selling, such as:
- What is the housing market like right now?
- Will selling your place get rid of all your debt and mortgage?
- Will you afford all home expenses upon downsizing and paying off your mortgage?
- What are the fees of home selling?
You’re Moving States
Did you find a new job in another state? Or do you suddenly need to move to a different state to take care of a sick family member? Then again, you might just want to consider moving across state lines due to a lower cost of living and better financial situation.
If you’re interviewing for a new job, you’ll also need to consider whether or not you’re willing to relocate and move to a new state. Consider all of your options before making this decision.
If you decide to move to another state, you’ll need to sell your home and you may want to downsize when picking a new home. In such a case, your home value can help pay off your debt. A great option I had in this situation is finding cash buyers to buy my house in Nebraska.
When you are moving to a new state, be sure to work with a real estate agent knowledgeable in the local real estate market. Make sure to choose a new home that’s within your budget and keep the closing costs as affordable as possible.
Yet, if you have significant debt from credit cards or other loans, you may have a low credit score, which can make it more difficult to purchase a new property. As such, you may want to consider renting a smaller place while working to boost your credit score. Once your finances look better, you can consider buying a new house.
Emergencies
There are numerous emergencies and other issues that pop up throughout life that can force a family to sell a home. For example, you may face large medical bills that you can’t pay off quickly and easily.
Medical debt can pile up even if you only needed one major surgery and a few days in the hospital. However, it will get even worse if you need physical therapy and visits with multiple specialists. In such cases, an emergency fund is a good idea to create when you have no debt.
Besides healthcare costs, families may find themselves with few savings and certain expensive things popping up. Does your son or daughter need braces or a new pair of glasses? Or have you recently welcomed a new baby into the world?
While lovable, children can be rather expensive to raise. If you’re looking to save for your kids’ college, then you may need to sell your home, pay off other debt, and get out of your mortgage.
For example, one family who purchased a home with a VA loan and only had $2,000 in savings was struggling to make ends meet and pay off credit card debt. By selling their home, they gained more breathing room and possibilities for their financial future.
How Much Will You Make on Your Home Sale
When you are trying to figure out how much you will make after selling your home and how much you’ll have to pay off loans and credit card debt, you should try using an online home sale calculator.
You will need to subtract the fees associated with realtor services as well as closing costs, transfer taxes, and property taxes from the final lump sum of the house sale price. Remember that 5 to 6 percent of the final home sale price will go to the realtors of the sellers and new homeowners.
You’ll also need to account for paying off the rest of your mortgage. So, be sure to subtract the rest of the mortgage cost from the house sale price.
This will show you exactly how much you will make on your home sale. The final amount hopefully provides you with enough money to pay off your debts. You can learn more from the HomeLight Net Proceeds Calculator.
To ensure you get a good price for your home, consider selling to cash home buyers in Omaha. When it comes to cheap ways to sell a house, cash home buyers are a great option. Luckily, we buy houses Lincoln!
Are You Prepared to Move
Are you prepared to move? You may need to make a list of tasks to complete and a house moving plan. You should include the following on your list.
- Update the address on your driver’s license
- Forward your mail with USPS
- Pick a new school for your children to attend
- Transfer your children’s school records to a new school
- Hire a moving company
- Pack up your belongings and furniture
- Provide the keys to the new owners of your home
Moving can have plenty of tasks to accomplish and lots to consider. One thing that many people don’t consider is the emotional toll it can take on one’s mental health. If you were forced to sell your home to get out of debt, you may not be happy about the situation.
In such a case, you may become angry and upset. Depression may even be an issue if you really loved your home and may have raised your family there. Nostalgia related to moving away from your house may make you sad as well. However, you might also have a sense of relief once you get out of the pressure associated with large amounts of debt.
When preparing to make a major move, you will need to be aware of the emotions that can come along with it. If you need to, you can likely speak with a social worker or counselor to better deal with the mental health toll of your move.
Risks of Selling Your House to Cover Debt
Should you sell your house to pay off your debt? Unfortunately, there are some risks associated with selling your home to cover your debt. For instance, it may be more difficult for you to buy a new house in the future if your credit score took a hit from the debt.
You’ll still need to pay rent if you move into an apartment. If you’re struggling with debt and had trouble paying off your mortgage, then you may still have trouble with covering a monthly rent payment. Selling your home can also take a long time. As such, if there’s another choice that can help pay off your debt, you may want to choose that alternative.
Conclusion
There are numerous reasons why you may need to sell your home to pay off debt such as major medical emergencies. By checking online calculators, you’ll learn whether your home sale price can cover your debt. Our best house selling tips include finding a cash home buyer for a quick and easy sale.