Looking for advice on Credit vs House

[jgraham114]

A little background...

My wife and I are considering buying a new house and selling our current one. We bought our current house 3 yrs ago as a foreclosure and owe 130000 on the mortgage. Our realtor thinks the house could sell for 155000 to 160000. The reason for buying a new house is that we are out growing our current house. Currently, we make about 100000 per year.

As far as debt goes, we have 5000 in credit card, 4800 left on vehicles, about 7000 on a home improvement credit and student loans as well.

I'm wondering what would be the best option:

1. Sell our current house and buy a new house using the equity to help with a down payment and leaving the debt as is.

2. Paying off credit card and vehicle debt then save some for a house plus using equity from current house.

3. Pay off all debt (except mortgage) then buy house. (What would be the best plan for this? Would it be a good idea to get a personal loan if the interest rate is low enough and pay off higher interest cards/loans?)

4. Any other ideas??

Thanks,
Jason
(Let me know if you need more information to give better advice)

[BMEPhDinCO]

I think more info would be helpful.

Is that $100k before or after taxes? Do you have kids? What are the interest rates on your other debt?

I would say #3 but with more info it would be helpful. In general though, with that income, you shouldn't have CC debt or anything like that.

[bjl584]

I'd be inclined to clean up your debt before thinking about another home purchase. You have the income to pay it off fairly quickly. Do you have any other debts? Assets?

[jgraham114]

I think more info would be helpful.

Is that $100k before or after taxes? Do you have kids? What are the interest rates on your other debt?

I would say #3 but with more info it would be helpful. In general though, with that income, you shouldn't have CC debt or anything like that.

That would be $100k before taxes. We have 2 kids and a dog that needs a bigger yard. Interest on credit cards are about 12%, interest on vehicles are 9%, home improvement I think is 6 or 7%. Most of the student loans are 7% and a small one is 0%.

Credit card debt is mostly from when I got laid off. (not a good excuse but that's the reason) I've been working for a year now and my wife also works.

[jgraham114]

I'd be inclined to clean up your debt before thinking about another home purchase. You have the income to pay it off fairly quickly. Do you have any other debts? Assets?

That's all the debts. What would be considered assets?

[bjl584]

That's all the debts. What would be considered assets?

Cash holdings, 401K, Roth IRA's, etc.

[jgraham114]

Cash holdings, 401K, Roth IRA's, etc.

I have 401k from work that I just started. I also have about 3500 in a traditional IRA. My wife also has about $11k in a 401k.

[JoshuaHeckathorn]

At least get rid of the credit card and home improvement debt first. I'm not sure what your other expenses are, but I'm guessing you could knock out that debt rather quickly based upon your income. Then, if you're really antsy to get a bigger home, I don't personally see a problem with pursuing that goal while still carrying a small auto loan and some student loans. Make sure you plan on putting at least 20% or more down.