• Question
  • Should I sell my home to pay my 120 000 00 in debt I was making a 6 figure income until I

    Asked by a 68 year old man from Sterling, VA on 6/24/2012

    Should I sell my home to pay my ~ $120,000.00 in debt? I was making a 6 figure income until I became unable to anything beyond ADL's after a botched back surgery. I now have an implanted pain pump with catheter into my spinal fluid that infuses ~ 2mg Dilaudid per 24 hours & I am still not out of pain.

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  • Categories: Paying Off Debt, Housing, Tapping home equity

Answers

  • Steve 

    Steve 
    NewRetirement

    San Francisco, CA

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  • Hi,

    This is a tough question, since it appears that a lot of your savings is tied up in your home equity. Some of the things to consider are:

    1) If you sell your house, what is your plan for housing? (Ex. can you downsize - sell your current house, pay down debt and be able to buy or rent another house with any remaining proceeds from the sale of your house?)

    2) What are the tax consequences of selling? You may be able to avoid capital gains taxes on up to $250,000 (or $500,000 for married couples) http://www.nolo.com/legal-encyclopedia/avoid-capital-gains-tax-selling-home-29901.html

    An alternative could be to get a reverse mortgage - however you are still swapping one kind of debt for another - although a reverse mortgage doesn't come due until you leave your home so long as you keep up with maintenance, taxes and insurance.

    Regardless due to the complexity of your situation - talking with a fee only financial advisor is probably a good idea. Below are a couple of places to look:
    http://garrettplanning.com/
    http://www.newretirement.com/financial-advisor-marketplace.aspx

    Good luck

  • Login to rate this answer:   Answered on 6/24/2012
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.