To Sell My Home or Not To Sell?

Question

Hello,

I'm in a pickle... I am a divorced father who hasn't seen his twin four year old boys for a year after their mother took them to live with her parents in Pennsylvania. That's a whole other story, so I'll spare you the details, but in short, I am starting my own business in order to get the money to pay a lawyer to fight for the right of me and my babies to be with each other. I still own the home I purchased when I was married, and let me tell you, it is PERFECT! It is one block from one of the most historically iconic main streets in Texas, Grapevine. It is also in the "Historical District." I am waiting on it's historical plaque from the city, and it is a reconstruction.

The city has undergone a resurgence, basically, people are knocking down all those OLD homes, historical homes, and rebuilding them within the regulations such that are still considered "historical homes," and are eligible for their own historical plaques. What this means is that the exterior and interiors are redone such that they have certain aspects that are modern, i.e. the tile, new wood floors, new cabinets, etc. However, they are all in the style of the 1920's and 40's. This is happening for most all homes in the neighborhood. Not to mention, it is in a PRIME location in DFW, and the city is known for festivals, wineries, parks, and a massive lake we live about 1 mile from.

I LOVE THIS HOME, and I bought it for my babies, but they are no longer with me, and I have some debt, but expect to pay it all off once my business gets going. Moreover, the home has rough valuations from the city and Zillow/Trulia at around $225,000 to $240,000! I bought the home for $185,000! With 4.00% APR, under 4 interest rate, like 3.85%. It is a VA loan, thus I didn't have to put a down payment down which is why I could afford it.

My question is, since the market in that neighborhood is so HOT right now, to the point just about all the homes have been redone and some are new constructions fit into lots within the neighborhood, should I sell the home and take the equity, or should I get a home equity loan? I HAVE NO IDEA what to do? Please, any advice would be greatly appreciated. Also, there are some issues with the settling bc the area is set on soil that is rather loose. The whole neighborhood has it, and I'm sure my home owners insurance would cover it when I go to fix it, which I'll end up doing whether or not I sell the home...

Thanks in advance!

Respectfully,

Daniel Stratton

Daniel Stratton · Answer

Thank you very much to the both of you! That's what I needed to hear. The real reason I was thinking about it was because of a friend, he thought I should go ahead and take the profit, but I was thinking the same things you all were to myself whenever I had thought about it before, so I think you are right. I think I'm going to wait and see how the business fairs. The money I'd get from the house wouldn't get me any closer to getting a lawyer, it would really only be used to pay off debts incurred during the first year I was fighting for my relationship with my children, before I completely ran out of money. Since I have my home right now, and it is a home, I probably should risk losing something so many people in my position would love to have. I need to count my blessings more so, not to mention, it always seems to be about half of what you'd expect when you start thinking about the profitability of a deal... i.e. all of the additional costs associated with closing on a house. Thanks again, I appreciate your input VERY much! Respectfully, Daniel Stratton

Jean Bolger · Answer

City assessments and Trulia/Zillow estimates can vary wildly from the real market value. You need to talk to a few realtors and have them run some recent comps to actually know what you could reasonably sell for. But for now, assuming the 225k - 240k is accurate; you probably don't have enough equity to get much on a heloc. They usually cap at 80% LTV. Your loan balance won't be very much below what you paid yet since you did the VA loan, so probably the max you're looking at is 12k. If you sell, you'll pay 6% in commission and fees. So you could net say 32k- 45k. But you wouldn't have a place to live, and you'd have moving costs. If you are now self employed with your new business then you'll find it very difficult to get a new loan until you have two years of tax returns showing profit in that business. So I think my advice, for what it's worth, is to keep the house for now. If the realtors tell you that you can get substantially more than you were originally thinking, then that might be a different story. But for now 1) you love it, 2) it's always good to minimize stress during a difficult time in your life- and selling is stressful!, and 3) you may well be able to profit quite a bit in a few years if you hold on to it.

Gregory Rice · Answer

@Daniel Stratton My opinion is that interest rates, loans, historical home, etc. are all irrelevant when it comes to your family. Do whatever it takes to get your children.