We will be selling our commercial building AND business. The buyer is getting financing for the building so we will get that money in one big chunk, but will make payments over 9 months to pay for the business. My husband and I are undecided what to do with our living situation; what’s your opinion?
We are Dave Ramsey fans and strive to, above all, be debt free. After paying off debts, we will have k from the sale of the building to put towards our house mortgage (currently around 5k and it appraises at 5k). No argument about that. We can’t agree on where to put the k from the sale of the business.
He wants to put that towards the current house as well. I want to use it as a down payment towards another home (from -110k) and rent out both parts of the current home (refinanced at 15yr mortgage). This would be enough rent to pay for both home mortgages. We currently rent out our basement and live in the top half of the home (we’ve been doing this for 6 years). It is 850sqft with 2 bedrooms. We have two boys that share a room and various large and small animals. AND, we have another baby due in 6 months. We are out of room! Even if we didn’t have a renter and spread into the basement, I wouldn’t feel comfortable separating myself from the kids. To get to the basement, you literally walk out the door to an (enclosed) outdoor stairwell and then into the door of the basement. It’s like a completely different structure that happens to be underneath. I don’t need a bigger/nicer home, just one that has a different layout (like a ranch). My husband acknowledges we’re out of room, but is zeroed in on paying off the house and says we need to rough it with 3 kids in one tiny room. He can’t, however, give me a timeline for how long we’ll be living like this. He, by the way, has nothing to do with the house. He doesn’t do ANY of the care taking of the kids or home and has no idea the stress this cramped home gives me.
I know my husband just wants the peace of not having a mortgage. I know that’s a good thing. My plan, though, is to continue to rent out the home until the market gets better and then sell this current home (within 5 years?) leaving us 100% mortgage free, and maybe we’ll have enough to get a car younger than 15 years old! Unless, of course, we’re able to pay off the mortgage with my husband’s next business adventure then we’ll keep it as an income property.
If you were in our shoes, what option would you be leaning towards? Thanks for taking the time to read!
I commend you on your responsible thinking.
It is good that both of you agree on the first amount of $70K. Payoff a mortgage is one of the better ways to have peace of mind. In today’s poor economy and low interest rates, it is also one of the better ways to get a better rate of return ( you are, in effect, investing the money at the rate of your mortgage ).
My own opinion is to follow what your husband wants: apply the $55K to the mortgage.
Once you are mortgage free, you can start planning for the future without the concern of falling behind on payments and the like.
I followed a similar route. I paid off my mortgage early; this really became a blessing when I was laid off and took 18 months to find another job. Not having to worry about the next mortgage payment really gives a feeling of freedom.
And if you own your property free & clear, most banks will give you a home equity loan against your equity with little problem, even in today’s climate.
Oh you lucky people. Compared to thousands of others suffering through this financial economic crisis, your fiscal position is enviable.
You and your hubby both have excellent investment ideas, although I would favor yours because it would generate future income.
When final decisions have been made and all the ink has dried, areas for investments for the future ie: portfolio enhancement, retirement etc. can be found at http://www.mutualfundwealth.com/
Okay, I am a Dave fan too. You may have answered your own question. You say "strive to, above all, be debt free." Is that your current conviction? or five years out?
So lets look at this: new balance will be $65 k, and add new mortgage $110 means $175,000. At 5% and 15 years monthly will be $1380 for this loan.
Can you swing it? You will have 9 months of income from the business ($55k), and two rental incomes, in addition to hubby’s new job. To be out in five years, you will have to now pay $2260 (and additional $880 on top of the $1380) monthly (assuming the amortization soon will be on $120k –the $175-$55k), plus two insurances, and 2 taxes. You know what you can budget. I do like your plan, but is it totally realistic? Only your budget can tell.
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