Would You Sell Your House If It Meant Debt Freedom?

debt freedom by selling our houseI swear being middle aged has sent me into considering all sorts of financial schemes to pay off debt and become financially independent. First, we were going to try and pay off our house within 5 years. Then, I felt an urge to sell everything and live in an Airstream trailer. Those ideas were probably a little ambitious or just plain nuts, but I can’t shake the seed of an idea that has grown into a real possibility as the housing market is starting to pick up where we live. We could actually sell our house and make enough money to pay off one of our rentals and buy a smaller home outright, which pretty much means debt freedom forever. Should we sell our house to pay off debt?

Being the financial blogger that I am, any big decision needs a list of pros and cons, so here we go.

Yes, You Should Sell That House!

-We owe about $150,000 on our home mortgage. Our house appraised for $375,000 a couple of years ago.  With sales in the area, we could get our appraisal price, but to be conservative, I’d say that we could count on $350,000. That leaves $200,000 in tax free profit! We could pay off our residential rental and still have $150,000 to purchase a really small updated house or a larger fixer that we could make our own.

-Our house is too big. Yes, I said that. When we built it, I can’t tell you how many times we were told to build the biggest house you can afford. This is what listening to the Joneses gets you. Although, we are well within what we can afford, our house is still way more space than we need for three people. Bigger house means more furniture, more heating, more repairs= more expenses.

-We have too much land. Our lot is just over 3 acres, which sounded idyllic when we bought it. A big house with acreage, isn’t that the American dream? Maybe if you raise cows, crops or hogs, but we only have one dog and a few house plants at them moment. Three acres means much more mowing, landscaping, weed control and prairie dogs (they are cute but carry the plague and dig up your yard!). I always want a yard, but we could do with a much, much smaller one.

-HOA has rules. We live in a neighborhood with an HOA. I’ve heard horror stories about HOA’s, but ours isn’t too bad. It’s only $350 per year and it makes sure no one lets their house look too trashy. However, the one rule that really bothers me is that we are not allowed to rent our house. If we decided to take a year off to travel, we’d either have hire some sort of caretaker or sell our house before we go.

No, You Better Stay Put!

– We have a super low mortgage interest rate.  It is fixed at 3.25% , and with our current payment schedule, we’ll have it paid off in 8 years. If we live here for another 10-12 years or longer as we planned, who knows how much our house might be worth?

-We love our neighborhood. We have awesome neighbors, a great place to ride bikes and play outside, and the views are really, really amazing. We feel very safe here as well.

-We like space. As much as it is a hassle to clean and mow, we like our space and not having a house right on top of us. When we lived in town, the neighbors were very close and we saw and heard way more than we needed to. (Yes, drug dealer living in an RV behind your parents, I’m talking to you)

-We live close to school. We are right over the border to make us out of district for our daughter’s school, but it still is only a ten minute drive to actually drop her off or a one minute drive to the bus stop when she gets older. If we moved into an area where we could buy a house outright, it would make lots more driving time.

-I hate moving. I’d rather do almost anything than pack up and move!

I’m sure there are a million more reasons to move or not move. As of now, we like our living situation too much to want to sell, but who knows what might happen in the future. I’m just very glad that we didn’t end up house poor. I think we got approved for something like $385,000 to build a house and we ended up borrowing $215,000. While I think a house in our neighborhood could sell for $385,000, getting a $200,000 profit on something that expensive just wouldn’t happen here, at least not for many years. Thank goodness we didn’t listen entirely to the Joneses!

Have you ever sold a house to pay off debt? Would you stay or go in our situation? 

Image Credit: Freedigitalphotos.net/jscreationzs

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Written By
Sydney White is a Texas-born stay at home mom who enjoys spending time with her family, bargain hunting and, of course, writing. She is currently the editor-in-chief of Snipon.com.

51 Comments

  1. I would absolutely sell my house if it meant being debt free – completely debt free. I have been broke and I’m not going back. I have been drowning in debt and I wouldn’t want that stress for anyone. If I was a homeowner and couldn’t afford my mortgage because of other debts I would admit my failure and sell my home to become debt free. That’s what I did with my car and now I save $800 a month.

    1. If we couldn’t afford it, it would be for sale tomorrow. As it stands, we will probably stay here at least until our daughter is done with school, although being debt free from a mortgage would be sweet.

  2. Ooh that’s a tough one…. Well, it sounds like you enjoy where you are and that you can easily manage it all. Why not stay? Unless the house’s size really is too big of a burden, you really are rocking it out and doing exceedingly well right now and you don’t have much left to pay on it! Good neighbors are hard to find, ya know?

    1. Thanks for saying that. It’s really not a mega mansion or anything. Our priorities have just changed since we moved in. We would not ever feel the need to build such a big house, but since we have it, might as well enjoy.

      1. If the neighbors are a big reason for staying put, consider this. What happens if several of them move out this year? Loving you neighbors is great but that can change for the better or worse at any moment and it’s completely out of your control.
        A great mortgage rate wouldn’t keep me in a house that no longer suited. Maybe it’s different in Canada, but here a mortgage is portable. It’s YOU that was approved for the mortgage. Yes they have to agree you aren’t putting more mortgage on the house than it’s worth but otherwise it’s all about deciding if you personally qualify for the loan; are you a good risk for them. Here you can take your mortgage with you to the next place, as long as you aren’t downsizing so much that it’s too much mortgage. They always let you increase the mortgage if you are moving to a more expensvie place.
        The deciding factor for me would be the math. Becoming mortgage free reduces your basic living expenses significantly. The $200K profit now kicks out 4% interest or $8K/yr. Do some number crunching – without a mortgage payment and with reduced maintenance expenses, what is your revised “magic number” for early retirement (ie 25 x your annual expenses)? Simultaneously downsizing your living expenses and boosting your investment income may just do the trick to allow you to retire a decade or two earlier. Food for thought, hmmm?

  3. I got sidetracked thinking about how the legalization laws have undermined the incomes of your ex-RV inhabiting drug dealer neighbour. It will be interesting to see the effects on the funding of crime and the grey market over the next few years.
    If we were to sell, it would be to buy a bigger place and the idea of having to pick how much more we want to spend out housing bothers me. We’re mortgage free right now and I quite like it that way, but I do want a garage and a bit of a yard, so it’s all trade offs.

    1. I suspect this guy was into meth. You would not believe the things we found in our yard after the weekend. But yes, the pot dealers are going to have a harder time, although our town has not allowed the sale of recreational marijuana as of yet, so they are probably still in business.

      Luckily, that was just a short term rental in the interim between selling our house and moving into our current one.

  4. That’s a difficult one to answer. I think if it’s too big, and you could get something you know you would love just as much with the added bonus of being debt free, I would go for it. I love acreage, but even with 1/2 acre I sometimes feel like our lot is too large, even with 2 dogs and a big garden. But being debt free is a big goal of mine, and even though some people don’t consider mortgages debt, if I could save the excess money for the next 8 or 10 years, I would probably go for it. Plus, even though you say it’s not bad, and it doesn’t sound like it is, I really, really, REALLY hate HOAs.

  5. I understand the emotional attachment you are feeling to the house and neighborhood. The question is, can you find a fixer upper in the same town while staying under budget? If yes then from a financial standpoint aka debt freedom I would sell and move on. Another tactic would be to buy another rental, use surplus rental income to accelerate the mortgage payments until you are free. Then after that you can use your income plus the rentals to pay off all the rental mortgages. Obviously selling now might get you to the goal faster, but the second option does have some advantages in the long run.

    1. We are certainly always on the lookout for another rental, so that is a good option. We aren’t in any sort of hurry, so we’ll see what happens.

  6. I don’t know… For me it would come down to where I wanted my kid to grow up. If it’s on a few acres of land, then stay put for now with the understanding that you’ll probably sell it when you get too old to maintain it – in a long time, but kids get attached to their childhood homes. If it’s not, then maybe move and find something that you’ll want to keep for a long time. Buying and selling houses gets expensive with all that commission!

    1. If we ever buy another house, it will be for a long time or something we can rent out if we move to warmer climates. My parents moved to a new house when I was 13, and I liked it, but never really got attached. Before that we had a smaller house, but a huge yard, where I can remember having some great times. That would be cool to live in one place for your whole childhood if it was fun and full of good memories.

  7. Our mortgage is the only debt we have and while I can’t wait until it’s paid off – I also wouldn’t sell my home to pay it off and move into a smaller home. That’s not practical for us and I’m comfortable with our mortgage payments. But I can see how that could be appealing to you or others. And I am a little envious of your three acres since homes are really close together in California too. I’m not sure if I would love maintaining it but then again, if I had three acres in LA, I would have someone else take care of it. 🙂

    1. I don’t even want to think about how much 3 acres in SoCal would cost, but I bet landscapers would be cheaper there. Luckily, Jim did landscaping in college, so he built our sprinkler system and can really do any of the yard stuff we need. He actually kind of enjoys it most of the time.

  8. We’re actually selling our house for this very reason! We are downsizing because the house is too big, requires too much upkeep, and the mortgage takes more of our money each month than we like. We plan on getting a smaller and much cheaper house to free up more of our money to pay down our debt then save up more quickly to travel.

      1. I’ll miss little things about it, like being able to walk to a couple parks and the library, but not much else. We aren’t close with our neighbors and my daughter doesn’t have any friends on our block to leave behind. I think we are ready to say goodbye.

  9. We are currently selling our home and moving. We aren’t doing it because of debt, but because we don’t like our area anymore. I do plan on getting a home that will cost us the same in a monthly payment, so I know that I can easily afford it.

    1. Location, location, location. I guess it is true in real estate. Luckily, our neighborhood is one of the more popular ones in the area, so hopefully home values will continue to rise. I guess we got lucky about our timing. I don’t think we would pay the prices homes in our subdivision are going for right now.

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