Please, please do not increase the indebtedness on your house. If anything goes wrong ( mortgage brokers who cannot deliver what they promise comes to mind), hen you're in a pickle. Your credit report will reveal to lender that your debts were paid down from money you got from an equity recovery loan, not from a change in spending habit. Consult with a really savvy, really experienced loan officer who advertises a specialty in helping people with prior financial problems. Don't know if it would work today, but in the past, ou could close on your sale and your purchase at the same time, and the lender lwould have the debts paid from the proceeds of sale, and in some cases I've even heard of them having the buyer cut up credit cards at the closing table.e paid down from money you got from an equity recovery loan, not from a change in spending habit. Consult with a really savvy, really experienced loan officer who advertises a specialty in helping people with prior financial problems. Don't know if it would work today, but in the past, you could close on your sale and your purchase at the same time, & the debts would paid from the proceeds of sale, and in some cases I've even heard of having the buyer cut up credit cards at the closing table.

A sale-leaseback is possible and those homes are marketed in the MLS. Speak to an experienced Realtor in your area. This way you aren't borrowing money, you are using a hopefully small percentage to pay off your debt. Leasebacks are not all that unusual. The stumbling block is that a buyer that is purchasing it to move into your home won't be able to do so and that will reduce your pool of buyers. The reason it reduces your pool of buyers is because most lenders have a requirement that the buyer move into the property within 60 days of closing if they are financing the purchase. Naturally this doesn't affect cash buyers or investors.

As an alternate, sell your home, pay off debt and move to a rental until you are ready to relocate.

Edit: check out myFICO.com for tips on improving your score. Too much debt will lower your score. Read the forums section there. It's free and the advice is (usually) accurate. You will recognize who knows what and which advice is not accurate after you have researched a bit.

Just a few comments. Credit scores are very complicated, but generally, increasing installment loans to improve revolving credit utilization, will raise your score. So the idea that you shouldn't move equity from your home to your credit cards is likely incorrect.

A lender isn't going to care in the least that you paid off your credit cards with home equity. I move money around between low interest introductory credit cards and home equity constantly and my credit score is doing OK.

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A sale and leaseback may lower your proceeds to such an extent where moving is simply smarter. I love houses with situations that make them unsuitable for typical buyers. Competition drives price, and when I see that 95% of the market can't compete for a home, then I typically offer less.

Just FYI

He said his score wouldn't allow for the HELOC (paraphrased). It's not that he doesn't want to do a HELOC, just that the lender won't approve it. I assume the OP has checked more than one lender.

"I love houses with situations that make them unsuitable for typical buyers."

Just curious,

Could any one here, especially the experienced real estate experts, please give some examples as " houses with situations that make them unsuitable for typical buyers"? Thank you in advance.

Debt SUCKS!

You could sell the house and rent a place short-term, like suggested above -- but you'd have to take a close look at rents in your area, it might end up being more expensive than your monthly mortgage payment, depending on the market. Do you really want to do a lease-back, assuming you could even find a buyer to allow that to continue for any length of time? No one can predict the future, who knows what's going to happen between now and next May/June. Once you sell, you're locked into buying or renting something.

As long as you have a roof over your head right now and can afford your monthly bills, just work aggressively to pay down your debt. Taking on a second job can help, even working at the local grocery store or Target one shift a week and applying everything to your debt can help whack it away. If you are having trouble paying your bills and it is in part due to a high mortgage payment, it's time to re-evaluate the whole situation -- selling might be the best thing for your long-term financial future. That's a whole other ball of wax...

I like Dave Ramsay's financial management methods, particularly when it comes to managing debt and avoiding the use of credit.

First, why are you moving and incurring more costs? Staying put and paying down the cc debt, and rebuilding your credit, could be the smartest option. But there are not enough details shared to know.

azmom, I find that houses that need any type of work sell for less. Condition (deferred maintenance) is a big factor for many buyers. Even if the work is small and cosmetic like paint or flooring. If the house needs more than cosmetic work, it sells for much less. Many buyers just don't want to take on any type of renovations in my area. this is usually either a money concern or a time concern and that's why those houses sit on the market longer. The exceptions are investors or the type of people that visit houzz and have vision :) Some other homes that sell for less than market include:

• Houses that are in probate typically sell for less.
• Houses that are simply dirty sell for less (!) This one is astonishing to me.
• Houses with tenants sell for less compared to similar homes without tenants unless you have a neat and clean tenant that allows showings on a reasonable basis.
• Houses with mandatory country club membership sell for less in my area.
• Houses with high maintenance fees, comparative to surrounding neighborhoods, sell for less. There is definitely an inverse relationship between the amount of the maintenance fee and the price of the real property - at least there is here in my area.
• Houses that have been chopped up into dysfunctional floorplans sell for less.
• Houses on busy streets sell for less.
• Divorces can cause houses to sell for less. It depends on how the property is presented and if the sellers are cooperative. If there are miscellaneous fist holes in the walls and doors, that's a problem. No one wants a house that has bad vibes (apparently).

There is more, but this list above plus the list that sealavender posted gives you a good idea of factors that can play a role. Some of these reasons don't make sense to me, but I see it in the marketplace.

Great list Denita.

And one more scenario that affects more sellers than is realized, is a condo unit in a complex that has a too high a number of rental units as opposed to owner occupied units. Lenders have a set ratio for any complex, and once the ratio is exceeded, they will not lend on it. This scenario mandates a cash sale only. One of the three main factors that drives price, in addition to condition and location, is the availability of financing. If financing goes away, generally, the sales price will come down.

*I* prefer a home with no HOA involvement, but do those properties bring less? I also don't want to pay maintenance fees for things I don't need or use: Gates, club house, golf course, pool, water features, etc.). I'd prefer to decide what maintenance is needed and who will do the work.

chisue, there is a huge diversity in pricing with HOA properties (in my area). But the general trend here is when the fees are high(er) the real property price is suppressed. Especially if the community is a mandatory country club membership type community. You can see it when you compare house A and house B with the same criteria (size, year built, same beds/baths, style, condition) and one is in a HOA community with high fees and the other is in a non-HOA community or one with low fees. This may be different for your area. The term 'high fees' is local and buyer specific. To generalize, when the fee is more than $350 per month there is a little resistance. Over $500/month and the resistance is increased. We have communities with substantially higher fees than that + mandatory club fees (both one time and ongoing quarterly or monthly).

As an example: one of the communities in my local market has mandatory country club membership of $90k one time time if you golf + $15k annually + other fees in their fee schedule + HOA fees which vary by the community within this community (if it is social only then it is the lowest up front fee of $50k + $8k annually+ HOA fees), If you compare these homes with others outside this community the real property is about 50% of a substantially similar house. We have these mandatory cc membership fees in many of the HOA communities. This is by no means the highest priced community at all.

Denita,

Thank you so much for the list. It is informative and eye opening, especially for a layperson like myself. I save it for future reference.

NC,

There is another aspect of condo issue as you mentioned. DD got a new assignment out of town, there is potential that she could be transferred back in a couple of years. But she is being forced to sell her condo as the association dis-allowed the unit to convert into a rental even for a short period of duration. We believe holding real estate for long term, this is definitely a lesson learned.

ncrealestateguy is right about condos and the rental issue you mention azmom is a real problem in some communities. I am so sorry your DD has to go through this.