Financial question

[meathunter]

I am currently selling my house. I have a good amount of equity in the house and have two options on what to do with equity once sold. We are only planning on staying in new house until both kids have graduated from high school (8-10 years).
Option 1:
Put full amount as a down payment on a new house.
Option 2:
Pay off all debt with the exception of new house. We would only have regular monthly bills if I do this and have a little left in bank. We would pay off auto and all credit cards, but would not have much to put down on new house.
Thinking I will put new house on a 30 year mortgage to lower payments. Anyways what would you do and what is your thinking behind it?

[yazoomike]

I think your house note would have the lowest interest of all so paying off all other debt and then focusing on the house note would be best.

[Cam-Mac]

I was thinking what yazoo said ^. it depends on interest numbers...

[cas077]

My buddy is going through the process of buying his first home. His banker has been meeting with him to figure out how he wants to pay for it and what will be the cheapest way. I would suggest talk to a banker or financial advisor.

[elkbowhunter]

Sounds great that you are planning this out. I would focus on being Debt free. People that pay credit card companies each month to finance thier lusts are just dumb. I would try to get it down to just your house payment, at the best interest possible. People who use credit(unless its an emergency) and don't pay it off each month are just brain dead and are prisoners of VISA. Be debt free. its an amazing way to live. Freedom rings.

[casilva43]

I think your house note would have the lowest interest of all so paying off all other debt and then focusing on the house note would be best.

Agreed, pay off higher interest rate debt first, then focus on the house. You can pay extra to the principal when you want.

[mharrington]

I was in your shoes a couple of years ago. I chose to pay off debt and only put the minimum down on the new house. Im glad I did with interest rates on mortgage loans being so low. I would, however, recommend that you look at a 15 year note instead of a 30 year note. The difference you pay in interest is astonishing.

[Split Arrow]

I think your house note would have the lowest interest of all so paying off all other debt and then focusing on the house note would be best.

This is good advice

[casilva43]

[QUOTE=mharrington;5118186]I was in your shoes a couple of years ago. I chose to pay off debt and only put the minimum down on the new house. Im glad I did with interest rates on mortgage loans being so low. I would, however, recommend that you look at a 15 year note instead of a 30 year note. The difference you pay in interest is astonishing.[/QUOTEI

I would suggest the 30year, You can always pay off the loan quicker if you would like. If you do get in a bind, you can just make regular payments.

[Throwin Darts]

I'd pay off the auto and credit card debt. It is most likely at a higher rate than what your mortgage loan would be and your mortgage loan interest is tax deductible so that lowers the effective rate as well.

Once you pay off your credit cards don't carry a balance on them anymore!

[BigTex.308]

I think your house note would have the lowest interest of all so paying off all other debt and then focusing on the house note would be best.

I have to agree with this.

As well as the 30 year mortgage. Like previously stated you can always pay it off early but if shift goes south it's easier to make those payments than on a 15 year plan.



-Ike

[glen]

Pay off everything and pay on the house. Get rid of credit lines and never het in debt again

[jmeghunts]

I was in your shoes a couple of years ago. I chose to pay off debt and only put the minimum down on the new house. Im glad I did with interest rates on mortgage loans being so low. I would, however, recommend that you look at a 15 year note instead of a 30 year note. The difference you pay in interest is astonishing.

THIS!! I did the same thing. Paid off all the toys and one credit card then put about $10k on the new home. It sure is nice only having the house payment.

[Coach W]

Im in the same boat as you except new house is rented... Gonna be putting alot towards my debt situation...

I talked to my financial advisor he said to take these steps:
1. Pay off any debt first. Start with the highest interest unless there was a very low amount needed to pay one off. For example if you have 1k in debt at a decent interest on one credit card and 3k on another higher interest card and have 2K to put towards the debt pay off the 1k card (stop having those monthly payments) and put 1k on the 3k balance... then pay off the remaing 2 k in one bill instead of having 2 sepreate credit card bills... (consolidate debt)

2. dont save until you can reduce your mothly pay off on debt. Throw all your assests at one debt until you can pay it off while paying the minimal on the other debts you owe. (focus on the highest interest debt first and it only) Pay it off and move to the next. You kill more birds if you pick one out of the group and shoot it instead of aiming into a group and scattering pellets everywhere...

3. Medical bills should be payed last... they carry no interest set up a low monthly payment on them and give them a few bucks a month until you can pay off your interest acrewing debt.

4. After all debt is payed off... Then SAVE. You cannot try to save if you have 2 credit card bills, 2 car notes, a house note and other medical bills... pay them off first then you will save yourself money in the long run.

5. Set a budget for spending... Figure out what you need for food, bills, and fun. Then use the rest to pay off debt.

Basically he said pay off debt 1 at a time. Dont try to pay off all debt at the same time Dont send 100 bucks toward 8 debts a month (800 bucks). instead pay the minimum on 7 debts say 50 bucs (350 bucks) and use that 450 to pay off the 1 highest rate debt... pay the minimal on everything and use what you have left over at the end of the month to hit one debt hard.

I hope that makes sense.. So far I have payed off the wifes tahoe and one of our credit cards...

[BigTex.308]

Im in the same boat as you except new house is rented... Gonna be putting alot towards my debt situation...

I talked to my financial advisor he said to take these steps:
1. Pay off any debt first. Start with the highest interest unless there was a very low amount needed to pay one off. For example if you have 1k in debt at a decent interest on one credit card and 3k on another higher interest card and have 2K to put towards the debt pay off the 1k card (stop having those monthly payments) and put 1k on the 3k balance... then pay off the remaing 2 k in one bill instead of having 2 sepreate credit card bills... (consolidate debt)

2. dont save until you can reduce your mothly pay off on debt. Throw all your assests at one debt until you can pay it off while paying the minimal on the other debts you owe. (focus on the highest interest debt first and it only) Pay it off and move to the next. You kill more birds if you pick one out of the group and shoot it instead of aiming into a group and scattering pellets everywhere...

3. Medical bills should be payed last... they carry no interest set up a low monthly payment on them and give them a few bucks a month until you can pay off your interest acrewing debt.

4. After all debt is payed off... Then SAVE. You cannot try to save if you have 2 credit card bills, 2 car notes, a house note and other medical bills... pay them off first then you will save yourself money in the long run.

5. Set a budget for spending... Figure out what you need for food, bills, and fun. Then use the rest to pay off debt.

Basically he said pay off debt 1 at a time. Dont try to pay off all debt at the same time Dont send 100 bucks toward 8 debts a month (800 bucks). instead pay the minimum on 7 debts say 50 bucs (350 bucks) and use that 450 to pay off the 1 highest rate debt... pay the minimal on everything and use what you have left over at the end of the month to hit one debt hard.

I hope that makes sense.. So far I have payed off the wifes tahoe and one of our credit cards...

Good advice!




-Ike