Heloc or Purchase transaction?

ag555

LoanSafe Member
May 21, 2010
4
0
1
Hi.
I need some advice on what my options are and recommendation to move forward. My main goal is to pay off my credit card debt then try to get into another home (based on what I can qualify for) without HOA. My biggest challenge currently is to pay the various credit cards each month with what is left of my income. Often times, I'm left with nothing or very little and not enough for any savings at all. If I can get rid of it, it will make life much easier with just a mortgage to deal with and then maybe I can live under budget and save.

Credit debt = 35k, ~600/mo,
Auto loans = 42k, 1100/mo, very low interest rate
1st Mortgage on condo = 250k, 1600/mo
HOA = 460/mo
Current value of home ~540k @ 50% equity
No 2nd (settled in 2011 and has dropped off my credit report)
Credit score = 665
Annual salary = 151k, 12.5k/mo

Should I get HELOC to pay off credit card balance and possibly some of auto loans and keep my condo. Wait some time (how long) for credit score to go back up and then see what I qualify at that time with better credit score?

Should I try to sell and buy as contingent transactions and get the credit cards and auto loans paid at the same time? Should I keep the condo and rent out and then what will I be able to qualify for as my primary home? I believe I can get rent that would cover the existing mortgage + up to around 500/mo more to pay a HELOC.)

Thank you.
AG
 

Jzone

LoanSafe Member
Jun 20, 2017
201
26
28
70
  • Don't become a landlord by renting out your home. Are you ready for tenant issues and maintenance? Hiring a property manager?
  • If you like your house, stay in it. If not, look to sell and downsize.
  • $1,100 for car payments. Don't get fooled by low interest rates-it's still a monthly payment and more expensive than paying cash. How many cars do you have? Is it possible to trade those in for less expensive models? Im sure this doesnt cover insurance for the cars? Get cheaper models and cheaper insurance.
  • 2nd mortgage settled in 2011. That was 7 years ago. Through bankruptcy or just didnt pay? Was there a lien and was it released?
  • Stop using your credit cards. You would be surprised what you can live on using only cash.
  • Where is the rest of your monthly income going? If you make $12,500 per month, lets say take home is $9000. Take out your listed monthly expenses and you still have over $6,000 left.
  • Get a Heloc only if you are paying off higher interest credit cards and dont plan on using credit cards anytime in the near future.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
It sounds like you have already made up your decision based on what I see.

Personally if you want to stay creditworthy without filing bankruptcy it sounds like your best bet is to sell the home and buy something else contingent to not only pay off the debt that you have but also get into a home without HOA.

Let's do some math:
540,000.00 - Value
32,400 - Realtor Commissions at sale of 6% (unless negotiated down)
250,000.00 - 1st lien
__________________________
Profit: 257,600.00

The big question would be, what can you do with the 257K? Can you pay off all your debt and also have a sizable down payment to get into the home you're looking to get into? Will the payment be affordable on the new home?

These are all questions I would ask myself personally if I was going through the same situation. If you want advice on how much you would qualify for whether you sell your home or rent it out, feel free to reach out - I would be happy to help.
 

ag555

LoanSafe Member
May 21, 2010
4
0
1
Thank you Erik. I do want to talk about this further so I will call you early next week. Let me know the best day and time. thanks.
AG
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hey AG,
Anytime is good, if I don't answer it usually means I'm on the other line and always call back my missed calls. Text & e-mail is great as well 619-379-8999 and [email protected]