Should I Sell My Home To Get Out of Debt?

Crippling debt is a source of major anxiety and financial hardship for many hardworking Americans, with recent studies reporting that 80 percent of Americans are now in debt for one reason or another. In a NerdWallet report published just last year, it was found that the average indebted American household has a revolving debt balance of over $15,000, and household debt has jumped in double-digit percentages in the past decade. If you’re considering selling your home to dig your way out of a hefty debt, make sure you can positively say yes to the following questions.

Could Your Family Easily Downsize?

Do you have more space than you know what to do with in your current home? With the more square footage you have, the more expensive your utilities are, whether that be heating, cooling, lighting—the list goes on and on. By downsizing, you’ll also be able to shed unnecessary furniture and décor that might be sold; when in debt, every little bit you can contribute to paying off an overdue balance is worth it. Whether you downsize through purchasing a new home, or just renting a smaller place for the time being, you’ll immediately find yourself putting out less money.

Do You Have Enough Equity In Your Home?

If you want to sell your home to get yourself out of debt, you need to have the right amount of equity in your home. The housing market continues to recover from the disaster of 2008, and more homeowners are finding they are now in the position to find a solid return on their investment should they decide to sell their home. Speak with an appraiser, talk to real estate agents to determine home selling prices in your area, and determine if you have enough equity to make it worth it.

Do You Have a High Mortgage Interest Rate?

If you’re paying a high mortgage rate and the rental rates in your immediate area are much less, it might be a good idea for your family to rent instead of own. Property taxes, utilities, and repairs cost a lot more in a personal home over the long run than a set rental rate would. If you can get out from under a mortgage, you’ll see a surplus of money that can help you pay off ongoing accounts and sooner see yourself free from the chains of debt.

Can You Handle a Hit to Your Credit Score?

If you do decide to sell your home, and opt for a short sale, you’ll most likely see your credit score take a deep dive. A short sale refers to the purchase of a home for a smaller amount that what is owed on the mortgage. Short sales are often done out of desperation, and if your situation is that dire, you may find this option unavoidable, but keep in mind the lasting effects it might have on your credit.

Is it Your Only Option?

Many of us growing up thinking that they only way to achieve true happiness (at least following the guidelines of the American Dream) was to purchase a home. This means the emotional attachment to a property can be extremely strong, and it can be hard for any of us to imagine selling off the home we’ve built and filled with memories. However, sometimes last resorts become our beacon of hope, and if you’ve find this is the case, you have your answer.

If you need relief from tax debt, it’s always a good idea to get professional advice—especially before making a decision as big as selling your home. Speak with a financial advisor, talk to real estate companies, and consider your options with advice from an expert.

Managing debt is hard, and millions of Americans are currently in the grips of crippling overdue balances. Without an increase in income, it can feel nearly impossible to dig your way out of debt, but using the assets you already have can mean finding your way out of this anxiety inducing situation and achieve the financial freedom you deserve.