Thank you for taking the time to read my post :) I will try and be brief, but you read the title here...
So we bought our house ten years ago, at the time being careful to keep it small and not overreach. Still, it was a bubble, and you know what happened next. At the time, we were trying to just own a home because both sets of parents were advising us this, and we knew so much less than we do now. I wish I could go back, but here we are. We had to get a HELOC to purchase the house, and then things bottomed out.
So today, my house is barely worth more than I owe on it. We are in the black, but not by much. My main goals are 1) Get rid of the damn HELOC, and 2) Get into a position where we have equity in our home, so that we can get our finances in order and 3) we can eventually start investing in real estate
mortgage: 185,000 4% interest
HELOC: 59,000 6% variable rate
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$244,000 is what we owe. $1500 mortgage is fixed, with $450 that's variable
So what would you do in my situation? Thank you in advance for your advice!
SELL: We MIGHT be able to sell for $270, but the market is soft still. Our neighbors tried to sell a roughly comparably sized home, and it just sat. Our roof is old, and there are some foundation issues that might cause trouble for us, but overall the house is cute, with good curb appeal. (It's a little beachy bungalow... 45 min commute to NYC by ferry)
TRY TO BUILD EQUITY: Another option we are looking into is a construction loan to do a second floor, and build equity into the home that way. This would allow us to get rid of the HELOC, and position the house better for resale.
RENT FOR A LITTLE WHILE: The rental market here is hot, and our realtor, who is also a property manager, feels that we should be able to get about $2200 in rent, with management fees taken out of that. The idea here would be to try hold for a few years until the market improves, and sell the house for a higher rate.
ON A SIDE NOTE Our financial situation has been rocky, due to a failed business. We are on the upswing now, and looking better by the day. We are looking to be debt-free within the next 1-6 months, so this is all part of the same plan to wrangle our finances and get our money working for us.