My wife and I are looking to sell our single family home and downsize to a house with less sq ft., to be closer to where we work.
In order to sell, I believe that we will need to take out a home equity loan (or line of credit?) in order to make our house more marketable and to get some things up to code.
Once we sell, we will need to secure a 30-year, fixed mortgage for a new house.
- Currently, we have more credit card debt than we would like and that has negatively impacted our credit rating.
- Our goal is to improve our credit scores by using the revenue from selling our current house to:
- pay off all of our credit card debt
- pay off the home equity loan
- make a downpayment on a new house
My question is, what is the best way to accomplish these goals and ensure that we are set up to succeed?
My fear is that we will sell our house, and then not be able to qualify for the mortgage loan for our next house. There is also the chance that we would not qualify for the home equity loan either.
Any feedback and advice would be greatly appreciated.
This is where you need to sit down with a mortgage company, real estate agent, and contractor (individually) to and hash through the plan.
You will need to know at a minimum what the likely sale price of your residence, how much it would cost to repair and finally how much cash you would have leftover.
My first thought I'd to rein in your spending and cut the credit card debt. After that, then start repairing the property using the cash you aren't paying towards the credit cards.
Once you have those two things done, then go talk to the mortgage company. This requires discipline and the financial companies (read mortgage companies) really like that.
Hope that helps.
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