Selling home, making a profit – better to pay off credit card debt or put money into new home?
I have some credit debt left and I’m wondering if I should put the extra money I make from selling my home into the new house I’m purchasing or if I should go ahead and pay off the credit card debt. What is a smarter decision?
Just wanted to say I’m not late on my credit card bills, just wondering if I should go ahead and pay them off in full right away
Have you lived in it for at least 2 of the last 5 years? If so, there’s no capital gains tax from the IRS, and the money is yours to spend as you wish.
Glenn is correct – This all depends upon what you’ll do with these newly cleaned up credit cards….. It’s a falacy that people can get out of debt by placing all their credit card debt onto their house. They usually run up their cards again in a few years and are then worse off than before.
Put the money to the house. Start paying EXTRA to your credit cards. Start cutting up your credit cards. Then start sending extra to your house.
FREEDOM!!!!!!
8 Responses to “Selling home, making a profit – better to pay off credit card debt or put money into new home?”
Pay off the credit card debt– the house isn’t going anywhere, so there will be plenty of time to work on that. The credit card debt will just linger like a bad wound. Get rid of it– you’ll feel great!
Comment made on March 22nd, 2010 at 12:46 amReferences :
Pay off the credit card. That is the worst type of debt to have, period. Cut up your cards, then buy a new house that you can afford. Whatever you do, please don’t get yourself back in the hole of CC debt.
Comment made on March 22nd, 2010 at 1:10 amReferences :
Always pay off credit card debt, and then do not get behind again ever!
Comment made on March 22nd, 2010 at 1:36 amReferences :
I think that you should pay off your credit card. Its smarter. That why when you purchase your new home you have one less thing to worry about. Its better to get your credit straight then get something new and still have old problems. Also you can get better loans and finanical support if you show that you can take care of those old problems
Comment made on March 22nd, 2010 at 1:47 amReferences :
In terms of raising your credit score, if you get your credit card balances below half their limits, then your scores will increase. In terms of financial practicality, it’s better to pay off credit cards, because the interest is higher than home mortgage interest, and it’s not tax-deductible. I wouldn’t say close the credit card accounts, because they’re good to have in case of emergency, and you need the open tradeline to increase your credit depth. My suggestion would be to pay off the credit cards as much as you can, while still keeping enough back for a 20% down payment on the house, so you won’t have to pay MI.
Comment made on March 22nd, 2010 at 2:44 amReferences :
I sold a home to a single lady a few years back and she had several thousand dollars in credit card debt.
I told her the same things these people are telling you–pay off your credit card debt because it is much higher interest.
Cynthia told me, "Glenn, I know myself to well. I will always have that credit card debt, if I pay it off now I will charge it back up to that level and have the debt on my house and the debt on my cards."
She was right. If you are going to use the money to pay off your cards then promise yourself not to let that happen again, or you have wasted your money.
Comment made on March 22nd, 2010 at 3:03 amReferences :
Put the money into the new home. Otherwise, you will pay federal income tax on it, and possibly state income tax. After you close, take out a home equity loan for the amount needed to pay off the credit cards. The interest on the home equity loan is tax deductible, and the interest rate will be much lower.
Finally, cut up the cards once they are paid off!
Comment made on March 22nd, 2010 at 3:43 amReferences :
Have you lived in it for at least 2 of the last 5 years? If so, there’s no capital gains tax from the IRS, and the money is yours to spend as you wish.
Glenn is correct – This all depends upon what you’ll do with these newly cleaned up credit cards….. It’s a falacy that people can get out of debt by placing all their credit card debt onto their house. They usually run up their cards again in a few years and are then worse off than before.
Put the money to the house. Start paying EXTRA to your credit cards. Start cutting up your credit cards. Then start sending extra to your house.
FREEDOM!!!!!!
Comment made on March 22nd, 2010 at 3:52 amReferences :
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