Background info:
Life situation: married, one child, living in Colorado Springs.
Net Salary/take home: $59k (this is after health/life/medical insurance, and pre-tax retirement)
Liabilities: primary home- $251k balance; originally financed at $274k (3.75% for 30 years)
Only credit card- $3800 balance; credit line to $17k, 14% interest
I want to sell my primary home. I believe a realistic listing price is $285k (based on my own market research; anywhere from $275k to $300k). My rough estimates show my gain as approximately $9,400 (assuming a “cost to sell” loss of 10% which includes the following estimates: 6% for realtor fees, 1.50% for seller-paid closing costs, and 1.00% for estimated repairs/concessions). I have requested a realtor provide professional market research to determine an accurate listing price; this is unavailable as of this morning (maybe a few more days?)
My long term goal is to buy a smaller home that is more affordable- I’m looking for a max price point of $230k. I want to rent for a few years, and get our financial life in order (saving for husband and daughter’s college, maxing retirement, etc.). I’ve already reduced the easy monthly expenses such as cable, cell phones, grocery budget. The last, and largest, remaining item to reduce is our mortgage expense.
My question is this: my home currently needs a few repairs. We tried to remodel our stairs (and failed miserably), so we need to install new carpet on the stairs, and replace the handrails/newels/spindles. Without too much detail, I believe our repairs would be about $2,400 (known cost of materials plus estimate of labor). Trust me- if I could post a picture I would- the stair repair is MANDATORY. I’m sure I could list without repairing, but it would definitely cost me more money (than the repair) in a lowered asking price.
I’ve been aggressively paying off my credit card balance, so I have no money saved for this. Should I save for the repairs now, and try to sell next spring? If I save for repairs now instead of continuing to pay off my credit card, my remaining credit card debt of $3300 would take longer to pay off. A potential option is that I now qualify for a 0% transfer credit card (didn't have the credit score previously), but I haven’t done that yet as we’ve been making $1k+ payments each month and I didn't think an inquiry would be worth it if I can pay off the credit card in 3-4 months anyway. I believe my other option is to use my credit card to finance these repairs, then use the gain from selling to pay off my credit card.
Given current potential rental prices, I believe we would save between $200-$400 a month (this is just a comparison of my current mortgage payment versus current monthly rental prices; this potential savings amount doesn’t include unknown owner expenses like repairs); but I would also need about $3k to move now (rental deposit, utility transfer fees, storage costs to declutter current home for quick sale, moving supplies and truck rental). So, total needed to move would be about $5,400 (cash needed to move plus estimates for repairs).
I think it’s worth it- except I’ve spent the last 18 months paying down our credit card debt, and I don’t like the idea of using the credit card again. Worst case, we can stay in our home, and live like everyone else. We can technically “afford” it (which is what my husband thinks), except we really can’t (MMM-style). Any thoughts?