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Message
Better to spend all of savings and be debt free or full of debt with lots of...
Posted on 4/16/13 at 1:29 pm
Posted on 4/16/13 at 1:29 pm
...savings?
Curious about the Money Board's thoughts.
I'm trying to sell my house, and I'm not having much luck on getting the offer I need to break even. In fact, it looks like I'll need to write a check for $9k just to get out of the house. Then, I'll need about $5k-$7k to purchase another one. That effectively wipes out the savings I've built up over the last few years.
I could rent the house and then purchase another one, keeping the $8k in the bank. I've already been preapproved to purchase a second home if I decide to rent out my house. Problem here is that I would then have two $150k+ mortgages, but at least I have a safety net if something happens.
I do need to move, and I've had two offers already.
Any thoughts?
Curious about the Money Board's thoughts.
I'm trying to sell my house, and I'm not having much luck on getting the offer I need to break even. In fact, it looks like I'll need to write a check for $9k just to get out of the house. Then, I'll need about $5k-$7k to purchase another one. That effectively wipes out the savings I've built up over the last few years.
I could rent the house and then purchase another one, keeping the $8k in the bank. I've already been preapproved to purchase a second home if I decide to rent out my house. Problem here is that I would then have two $150k+ mortgages, but at least I have a safety net if something happens.
I do need to move, and I've had two offers already.
Any thoughts?
8
Posted on 4/16/13 at 1:32 pm to townhallsavoy
quote:
Problem here is that I would then have two $150k+ mortgages
With interest rates so low this may actually not be a bad thing. And depending on how much your mortgage is on your current home, you could pocket even more money by renting it out. Why pay to move out when you could make money by moving out?
Posted on 4/16/13 at 1:33 pm to townhallsavoy
quote:
Better to spend all of savings and be debt free
quote:
Then, I'll need about $5k-$7k to purchase another one.
Dude, unless you are buying a moblie home or a cardboard box, you will NOT be debt free upon the purchase of another house.
I thought this was going to be one of them good ole debate threads on paying the house off vs. return on that money.
Anywho, why do you HAVE to get out of the house?
Posted on 4/16/13 at 1:37 pm to townhallsavoy
quote:Have you factored in your interest deduction from income taxes?
Problem here is that I would then have two $150k+ mortgages
Posted on 4/16/13 at 1:39 pm to OnTheBrink
quote:
you will NOT be debt free upon the purchase of another house.
Yeah my thinking also. You'll be in debt in either scenario so choose the one that won't make you cash-poor.
Posted on 4/16/13 at 1:42 pm to OnTheBrink
quote:
why do you HAVE to get out of the house?
Posted on 4/16/13 at 1:44 pm to OnTheBrink
quote:
Dude, unless you are buying a moblie home or a cardboard box, you will NOT be debt free upon the purchase of another house.
I thought this was going to be one of them good ole debate threads on paying the house off vs. return on that money.
Anywho, why do you HAVE to get out of the house?
Sorry, I don't consider my mortgage to be "debt" as it's a cost that everyone typically has.
So, debt free was the wrong term.
We need to get out of the house for work related reasons.
Posted on 4/16/13 at 1:46 pm to LSURussian
quote:
Have you factored in your interest deduction from income taxes?
I haven't because I'm a child when it comes to understanding investments and interest and insurance and other adult things in finance.
What should I expect?
Current house has $167k left on mortgage. $950/month mortgage. Rent will be $1200/month, but all of the profit would go to a savings account in case we need to make repairs/unexpected expenses.
We'd be looking at a house $140k-$160k.
Posted on 4/16/13 at 1:47 pm to townhallsavoy
What's with the rash of posters creating their own accounting rules?
Posted on 4/16/13 at 1:47 pm to townhallsavoy
quote:
Sorry, I don't consider my mortgage to be "debt" as it's a cost that everyone typically has.
Wrong way to think about it IMO. But that's for another thread and discussion.
quote:
We need to get out of the house for work related reasons.
Tough spot. As someone mentioned above, renting it out may be the best option in the immediate future with rates low.
Posted on 4/16/13 at 1:48 pm to ZereauxSum
quote:
Yeah my thinking also. You'll be in debt in either scenario so choose the one that won't make you cash-poor.
The fear is that I have two mortgages and have to rely on renters to not go bankrupt.
If I get shat on by my renters and then can't fill the house with people, we couldn't afford two mortgages for very long.
This post was edited on 4/16/13 at 1:53 pm
Posted on 4/16/13 at 1:49 pm to townhallsavoy
quote:
If I get shat on by my renters and then can't fill the house with people, we couldn't afford two mortgages for very long.
That to me is the answer then. You should only rent it out if you can afford no one to be in the rental for 6-12 months. Take the hit, move on, and continue to build your emergency fund.
Posted on 4/16/13 at 1:55 pm to OnTheBrink
quote:
That to me is the answer then. You should only rent it out if you can afford no one to be in the rental for 6-12 months. Take the hit, move on, and continue to build your emergency fund.
We COULD spend our savings for 8-10 months. It'd be possible, but not ideal.
My wife would kill me then die of a heart attack. She's terrified of renting the house out and insists it would only lead to trouble.
I feel like selling the house and depleting our savings will only lead to trouble.
Posted on 4/16/13 at 1:59 pm to townhallsavoy
quote:
It'd be possible, but not ideal.
quote:
She's terrified of renting the house out and insists it would only lead to trouble.
quote:
I feel like selling the house and depleting our savings will only lead to trouble.
Doesn't sound like there is an ideal scenario in this situation. I did learn very early own that when my wife was happy, my life was happy!
Posted on 4/16/13 at 2:07 pm to townhallsavoy
quote:The interest is deductible for most taxpayers and if you rent the house then you probably can have a depreciation (non-cash) deduction, but there are special rules which apply to rent houses that you once lived in, so, as they say, see your tax adviser.
What should I expect?
Posted on 4/16/13 at 2:24 pm to townhallsavoy
quote:
We need to get out of the house for work related reasons.
sounds to me that you are moving out of town. With this scenario I would sell because it is going to cost you a fortune to fix the issues with the house once a renter breaks (they will always break stuff). I would payout and then start to rebuild the emergency fund again
Posted on 4/16/13 at 2:51 pm to trident
I wouldn't rent it out unless you don't care about the condition of the house much. Renters tend to frick shite up. Even if the deposit is $1200, chances are they'll do more damage than that.
Posted on 4/16/13 at 3:13 pm to townhallsavoy
Would you qualify for 2 mortgages?
Would one of them be considered a small business loan and be at much higher interest rates?
Would one of them be considered a small business loan and be at much higher interest rates?
Posted on 4/16/13 at 3:47 pm to Tigerpaw123
We qualify for two mortgages. Great credit scores and good enough income.
My bank said they would both be home mortgages.
My bank said they would both be home mortgages.
Posted on 4/16/13 at 3:50 pm to Tigerpaw123
Not sure what the answer is, but I don't think the answer is to carry two mortgages, even with renters in one of the houses. What if you have to make major capital improvements to either house at the same time? You're taking on quite the risk by doing this.
I'd consider selling the house by owner to avoid paying a realtor. See if this gets you back to even. At the very least, you can see where your offers come in and no what the market is telling you about the value of your home.
If you decide not to sell it, rent the house and then rent a cheap apartment while you build up more savings. Reassess in one year.
I'd consider selling the house by owner to avoid paying a realtor. See if this gets you back to even. At the very least, you can see where your offers come in and no what the market is telling you about the value of your home.
If you decide not to sell it, rent the house and then rent a cheap apartment while you build up more savings. Reassess in one year.
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