Is it a Good Idea to Sell Your Home to Get Rid of Debt?
If you have some debts that you are working to pay down in hopes to live almost completely debt free, you might have wondered if selling your home would be a good way to find a large sum of money to pay those debts off and pay less interest.
Is It a Good Idea to Sell Your Home to Live Debt Free?
The financial advice expert Dave Ramsey is a firm supporter of living completely debt free, even to the point you own your home and cars outright. Here are a few of his tips from his Dave Ramsey Solutions blog.
Why it Might Be Worth it to Sell Your Home
Your Mortgage Payment is Large
According to the Dave Ramsey blog, Dave Ramsey feels the only scenario where it might be beneficial to sell your home in hopes of canceling out debt is if your mortgage payment is taking a large portion of your income away every month.
He always advises that a mortgage payment should be no more than 25% of your monthly take-home income. Other financial advisors say this number should be somewhere around 1/3 of your take-home income.
If your mortgage payment costs more than this, it would clearly be beneficial to free up more of your money to enable you to become debt free sooner rather than later.
Another Reason to Sell? You are Going to Move Anyway
If you are within your means of paying your mortgage every month where it is not tying up a large portion of your income, there is no reason to sell your home in hopes of becoming debt free. In fact, in the long term, home ownership is a beneficial investment that builds wealth.
If you are planning to move anyway, this might be worth considering instead of purchasing another home right away when you move to the new location. But you should ask if it will help or hurt your current financial situation. You want to make sure that your home will make a decent profit when you sell it and that it will be a significant enough amount to make a decent dent in your debt or completely pay it off.
For more information on buying or selling a home in Granbury Texas contact us any time.