Should I sell house and pay off 20k in cc

[gator68]

My wife and I have 20K in cc debt. We had to put 12K on the cc when she stayed home with our fourth child this past year. She is now back at work and we are doing well. We want to build, but we aren't sure if we should sell our house and pay off cc's or stay where we are and pay them down over the next two years. If we stay, we are worried that interest rates will go up b/f we get the cards payed off.

[gator68]

Here's a side note. I could sell my house pay off cc's and I would have an extra 500 a month to go to a new mortgage. Problem 1, no money down. Problem 2, no money down. Can I get a land loan and a construction loan with no money down?

[Merch]

I would argue that the issue is not paying off the credit card, but has your behavior been modified where you won't repeat the mistakes of the past?

Personally, I would probably stay in the house, work on a budget, and pay down the credit cards.

But you didn't give much information, so this might not be good advice.

[gator68]

We have a budget and we are paying everything plus some each month. Like I said, my wife took off from work and we had to put things on cc's that we don't normally do (like medical for my son and braces for my daughter), but we are passed that and we make payments easily. the cc's are low interest, 4%-5%. However, we could buy a bigger house and pay more each month in mortage and at least the 500 extra each month goes towards home equity instead of to cc company. Does this make sense?

[maat55]

If you can pay down your cc debt in two years, you should stay in the house you have. The market is not going to give 100% loans any longer. If you are determined, you will get debtfree and in time be able to move if you wish. Hang in there.

[Seeker]

We have a budget and we are paying everything plus some each month. Like I said, my wife took off from work and we had to put things on cc's that we don't normally do (like medical for my son and braces for my daughter), but we are passed that and we make payments easily. the cc's are low interest, 4%-5%. However, we could buy a bigger house and pay more each month in mortage and at least the 500 extra each month goes towards home equity instead of to cc company. Does this make sense?

It depends on a whole bunch of factors.

If you sell your current home and pay off debt with the excess, then problems you've alluded to in your first posting will be there....

Where will you get the down payment for your "bigger house?"

In two years, maybe (who knows) the housing situation will have recovered somewhat. Then again maybe not.

Selling your current house may also be problematic. It sounds as if you don't have a whole lot of equity in it, or that the value has come down such that you'd only gain enough to pay off the debt. There's a bunch of fees and problems associated with this process.... moving, working, children, school, etc.

I second maat's opinion in this case.

Bigger is not always better. Paying down debt over two years has a realistic sound since you may not have put aside enough for a down payment on another house in two years, and/or the housing may be out of reach at that point as well.

Staying where you are and paying your house in the long term is what behooves you.

If you have other reasons, or want other input, then you should probably post a budget.... income and expenses monthly. And also the current home details (current sell value in your particlular area; and the equity). As well as the percentages of cc debt and dates the rates go up... etc.

[noppenbd]

My wife and I have 20K in cc debt. We had to put 12K on the cc when she stayed home with our fourth child this past year. She is now back at work and we are doing well. We want to build, but we aren't sure if we should sell our house and pay off cc's or stay where we are and pay them down over the next two years. If we stay, we are worried that interest rates will go up b/f we get the cards payed off.

You need to post a lot more detail to get a good answer. Things like your current house payment and loan terms, household income, house payment for the new house, retirement savings, ages, etc.

A complication with your plan is that if you are somehow able to buy with no down payment your interest rate is likely going to be higher than if you put 20% down. I would not buy based on interest rates. I would buy when you are financially ready for the move. It sounds like your aren't there yet.

[jIM_Ohio]

We have a budget and we are paying everything plus some each month. Like I said, my wife took off from work and we had to put things on cc's that we don't normally do (like medical for my son and braces for my daughter), but we are passed that and we make payments easily. the cc's are low interest, 4%-5%. However, we could buy a bigger house and pay more each month in mortage and at least the 500 extra each month goes towards home equity instead of to cc company. Does this make sense?

How much are you setting aside (relative to gross income). If it is less than 20%, I would advise stay in current house until you can save 20% of gross income. You do not need a bigger house if you cannot pay for it while saving 20% of gross income.

I would stay in current house and work on the budget.
Make sure 15% of gross pay is being set aside for retirement
Make sure 5% of gross pay is being applied to the debt
Once the debt is paid off, use the 5% to increase short term savings so the next emergency is not charged.
Once the short term savings is 6 months expenses, then have the 5% go to a new house fund.

When we built we put $1000 security deposit down, then put 5% down when we signed the contract and secured financing.

[LivingAlmostLarge]

Depends on the budget. Maybe selling is the best idea if you can't afford your house. And maybe you can't thus the credit card debt. I have no idea but you need to post more details for us all.