Signs that you should probably sell your house

By Neal McNamara | May 18, 2014
Home Prices

How do you know when you should sell your house, like, right now?

When you’re paying half your monthly income toward a 30-year mortgage on a tiny home.

KTTH financial guru Dave Ramsey recently spoke to Renee, from Canada, who was seeking advice about the stress her housing situation is putting on her family.

Renee and her husband’s monthly take-home pay is around $4,000. Their biweekly mortgage payment is $1,000, or approximately $2,000 per month. Ramsey balked at that arrangement, commenting that Renee and her husband and two kids must be “drowning.”

Renee agreed. But, they have a way out. Renee said she could sell the house, pay off $8,000 in debt, and still have around $50,000 left over. The family would put $25,000 in savings.

Since Ramsey usually warns against 30-year mortgages, Renee wondered if they should sink their remaining $25,000 into a new home with a 15-year mortgage. But Ramsey nixed that idea, saying that if they’re paying $2,000 per month for a 30-year, they probably won’t pay less for a 15-year.

Adding to the mix is the husband’s career. He hurt his back several years ago, and has been working a menial, low-paying job while he heals. Renee earns more working part-time than her husband does working full-time.

Ramsey advised that the family sell the home, live cheaply in a small rental for a few years, and focus on getting the husband back up to his full earning potential. By then, the family will be out of debt and likely in a better situation to afford a home with a shorter-term mortgage.

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