Debt as a Homeowner
People facing financial stress caused by debt have several options to shrink that balance owed. Solutions depend on the size of the debt, the interest rates, and the ability to make payments. Homeowners are in the position to use the equity in their homes to pay off some of the debt by selling the home and downsizing to a smaller one. We'll walk you through how to consider if this is the right option to tackle your debt.
Facing Financial Stress
Medical bills, unexpected repairs, job loss, credit card debt, and divorce are just a few of the reasons someone might face financial stress. Debt can pile up quickly, and figuring out how to tackle that mountain can be daunting.When facing situations like these, the first thing to do is to take a look at finances overall. Can the situation be fixed by getting rid of a second car or picking up more hours at work? Will it take a larger amount of cash to tackle? Because of high interest rates, is it imperative that the debt be paid down as soon as possible? Answering these questions will allow homeowners to decide if selling their home for cash is a feasible solution.
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Assessing Mortgage Payments
A great reason to sell a home to pay down debt is if the mortgage payment is too big. A huge payment eats up too much monthly income, leaving little or no extra funds to tackle debt. The best financial advice says that no more than 25% of after-tax income should go to a mortgage payment. However, many people end up with mortgage payments that eat up far more of their income.
We recommend that those in financial stress consider whether the size of the current house is really necessary. People find themselves in houses that are too large for a variety of reasons. Finding somewhere new to live is stressful, but in the long term, it makes financial sense. Sometimes moving to a new area or neighborhood is the solution, especially if a similarly sized house can be found for a lower price.
Downsizing Your Living Situation
When choosing to sell a home to pay down debt, two options are available: buy another smaller home or become a renter. Remember that buying another home will come with closing costs and other fees. However, renting in some cities ends up being more expensive than buying due to rising costs of living and inflation. If rents are on-par with the current mortgage payment in the too-big house, moving to a renting situation isn't ideal.
The sale of the old home will provide funds that can be used to purchase a new, smaller home with a lower mortgage rate. Just make sure enough will be left to reduce financial stress by seriously tackling a chunk of debt while freeing up the monthly income necessary to make larger payments on remaining debts. Research the renting and buying markets as much as possible before making this decision, and always keep financial goals in mind.
Finding the Right Buyer
Selling a home to pay off debt is a little different than selling due to moving cities or upsizing to accommodate a growing family. Sellers may need cash faster than the typical real estate process goes, and waiting for a buyer to get a mortgage approval might not be feasible. Additionally, people in financial stress likely can't afford to do any home repairs before listing the house on the market and may not want to lose a percentage of the sale to the real estate agent.
Selling to a cash buyer means finishing the transaction faster and getting the funds necessary to pay down debt. Not all cash buyers have the same reputation. For example, at Coveway Properties, don't require sellers to pay closing costs, real estate agent fees, or home repairs before we buy a house for cash. Our process takes five days, without stressful negotiations or pressure. Look into what a cash buyer is offering besides the price of your home, and how reputable their business is, before agreeing to a contract.
Getting out of debt isn't easy, but selling a house to a cash buyer can be a good solution to financial stress. To find out more, start by getting your cash offer from us. At Coveway Properties, we want to reduce stress while buying properties as-is, offering our sellers a fast and simple process, plus a fair cash offer. We offer home buying solutions with no obligation. Get in touch today.
Why Choose Coveway Properties?
Selling a home can be scary, especially if you're under financial stress. That’s why we’ve created a Cash Offer Process that’s seamless and streamlined. Here are just a few reasons you should consider working with Coveway:
- We have a decade of experience buying homes
- We’re a proud, local company that cares about the Bay Area community
- We help families overcome financial hardships of any kind
- We buy homes in all types of conditions
- We treat each seller as an individual and provide tailored suggestions and advice based on your unique situation
- We believe in guidance-oriented solutions; we don’t just offer you cash for your home— we walk you through the process and ensure you’re comfortable throughout
How to Get Started
We believe that everyone should have a fair chance to reduce their financial stress. If you live in the Bay Area and want to sell your home fast, we’re happy to work together to create a fair and quick cash offer.
Getting started with Coveway Properties is just as easy as selling your home to us. Simply contact us by filling out a short one-minute form and one of our professional real estate investors will be in touch within a day to discuss our offer and begin the closing process.
Contact us today to get your cash offer within 24 hours!