financial dilemma

jrk123 · Joined: 19 Dec 2005 Posts: 3

My husband and I need some advice on whether to stay in our current home or sell. We go back and forth literally almost daily and it's driving us nuts. We bought this place 6 years ago. It's a "starter home". We have debt and have made some bad financial decisions and don't know the best way to go about getting out of it. We refinanced about 3 years ago into an 80/20. Before that we took out a home equity loan to consolidate debt. We now know that's not the best thing to do. So our current mortgage is at 123k and the second one is at 23k. The second mortgage is all debt that we refinanced and also put a vehicle on because of the lower interest rate. (stupid, I know). I would say about 8k on the main mortgage is also refinanced debt. The original house price was 122k. As you can guess we also have about 6k in credit card debt that we've been paying on forever. It was 9k about a year ago so we've made some progress on that. If we sold the house now we could make about 30-40k which isn't enough to have a 20% downpayment on anything around here, but maybe a 5-10% downpayment and in the process we'd pay off all the debt and hopefully have enough to pay the credit cards off at the same time. The problem with that is the next mortgage payment would be on the steep side for us. If we stay and just keep trying to pay the debt down we have the lower mortgage payment that is easier to handle for us but at the same time the place needs windows, it's cramped with 2 kids, only one bathroom, and no garage (there's space for one but obviously we can't afford it). It's a one and half story and when the people finished the upstairs they didn't vent it properly so someday down the road that will have to be redone as we're told eventually it will start to rot. The heating and cooling bills are outrageous as the place is poorly insulated and the bad windows. All this and not much money to keep up with it. So do we take a chance and go with a higher mortgage but better house and be rid of the debt or stay here and try to pay off the debt and try and fix the house as best as we can when we can and deal with the annoyances. Sorry so long but any opinions would be welcome. Thanks!

The Mortgage-Pro · Site Admin Joined: 19 Jan 2005 Posts: 2248

How much debt do you currently have? What is your house valued at?

jrk123 · Joined: 19 Dec 2005 Posts: 3

Line of credit is $23k, credit cards are $6400, car loan $5800. Our house is probably valued around $175k-185k.

The Mortgage-Pro · Site Admin Joined: 19 Jan 2005 Posts: 2248

Just looking at the numbers you provided it is hard to say what you should do. Can you find a house more suited for you for less money?

jrk123 · Joined: 19 Dec 2005 Posts: 3

Nope. We'd either have to move an hour away from my husband's work or move to the slums of the big city. So I think what you're saying is probably stay and keep plugging along on paying down the debt?

The Mortgage-Pro · Site Admin Joined: 19 Jan 2005 Posts: 2248

It sounds like you need to stay where you are. Perhaps get a better job.