New to Board - Home Equity or Sell ?
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New to Board - Home Equity or Sell ?
| Fri, 05-13-2005 - 12:54pm |
Hi Everyone,
I have turned to Ivillage's community for help in the past with great success and return now for wisdom.
I have been carrying a good deal of credit card debt for 5 years or longer. Approximately $26,000 worth. I have a well paying job but am having trouble making minimum payments due to large student loan payments. I am in a situation where I either need to sell the condo which has approximately $30,000 or equity or take out a home equity line. Has anyone been faced with this decision? The thought of being able to completely walk away from the debt by selling is extremely attractive and I want to make sure I cover all of the thought process.
Thanks!!
Kimberly

My suggestion is to take out a home equity loan.
If you sell you have to pay relator fees, title fees, inspection fees and on and on..... a refinance is much cheaper. Especially if you stay in your condo for another couple of years, you will be able to build up more equity and then come out on top instead of just breaking even.
My husband and I did just this. We bought our home a year ago and it appreciated a ton!! (we live in California). So we took out a Home Equity Line of Credit, paid off our credit cards and our car. We saved several hundred dollars a month by consolidating our debt this way. Now we actually have a savings account!
Hi Kimberly - welcome to the board.
All my best,
Danni
DH & I have been exactly where you are. We opted to sell. Questions to consider:
1. If you sell your condo, where would you live? What would be the new housing cost?
2. What would be your total monthly savings from all the bills you will be paying off (including condo) and how does that measure up to your new housing costs? Is it still worth while?
On the equity question: are you looking at a Home Equity line of Credit, which is an open line of credit similar to a charge card? They usually have variable interest rates, so that might be problematic if the rates keep going up. Also, these loans have an interest only option, which allows you to pay interest only for a few years. Attractive when you need cash, but expensive in the long run.
A home equity loan is similar to a mortgage with fixed interest and monthly payments.
This is a very tough decision and I wish you the best of luck.
Do you have other things to sell instead? Have you reduced your expenses as much as possible? Do you follow a budget?
Hope this helps!
Sandra