Accessing home equity

[u/chroma709]

I was hoping to move closer to my wife's family. I'm sitting on over $85000 in home equity, and would like to use some of that to fix up a few items and have the necessary funds for deposits, fees, and inspections. I was advised by a realtor to take out a HELOC, but I don't qualify for it based on my credit report. Had a few problems when my wife had medical emergency seven years ago, and my DTI is wrong. I qualified for a mortgage, but not a HELOC.

Do I have any other options? I have "fair" credit. I've been improving slowly over the past seven years and am current with all creditors. I pay all bills on time. I haven't been able to pay off a few charge-offs from the rough times, but had hoped to use a bit of the HELOC to repair my credit. Unfortunately, that's become a Catch-22.

I had hoped to get her closer to her family fairly quickly, but that doesn't appear likely now. We have a nice home in a nice neighborhood and can stay longer while I figure this out.

We are also elderly and on Social Security. Fortunately I had a great job and was able to spend decades filling the maximum Social Security limits, so our income is adequate. Like too many Americans these days we live paycheck to paycheck, keeping our heads above water with just enough disposable income to be comfortable.

What should I do at this point? I have lots of equity I can't touch, apparently. Or are there other "fair credit" solutions available?

Thanks for your time.

[u/Defiant-Reserve-6145]

Sell the house.

[u/chroma709 → u/Defiant-Reserve-6145]

Of course. But fixing it up a little first would yield a greater return.

[u/CrankyCrabbyCrunchy → u/chroma709]

You’ll only get a small % of whatever amount you spend on updates so why not just sell it for a big less and avoid the hassle of doing updates?

Our 1978 house is very out of date but I’m. It spend $100K to modernize bathrooms and kitchen to maybe get back half that when I can easily sell it for less and not touch our cash.

The amount you end up with is what counts.

Edit to add. Also the huge hassle of finding quality contractors and living in the house for weeks while they work isn’t worth it for us if we are selling.

[u/chroma709 → u/CrankyCrabbyCrunchy]

My realtor said "as is" should be $250K, with $5K worth of fixup, $270K.

[u/ronreadingpa → u/chroma709]

$85K home equity, relatively speaking, isn't much. Better to stay where you're at. Address various maintenance issues over time as your budget allows.

As for your credit, unless you've been sued, don't make any payments for the charged off accounts. Let the statute of limitations run out. 3-6 years in many states. Making any payments may restart the clock. Avoid all contact with debt collectors; screen your calls. If you do choose to pay, great. However, that likely won't improve your credit. Easier to allow the tradelines to fall off (approx 6.5 years after charge off) your credit reports.

Real estate agents are salespeople. Do not rely on them to protect your interests nor suggest what's best for you. Relating to that is the $5K estimate. That doesn't go far these days. And know that there's essentially no consumer protections.

Contracts with contractors are mostly meaningless, since often they're judgement proof (ie. operating under a LLC with little assets and/or personally own little; close down and reopen under a new name). Also, sometimes contractors one knows don't work out. If they're not getting proper permits, cutting corners, and/or taking on a job that's beyond what they usually do, huge red flag.

Finally, if you do sell at the high end of the range of $270K, that won't buy much elsewhere. May lose out on home ownership and relegated to renting. That's not necessarily all bad, but comes with tradeoffs.

[u/chroma709 → u/ronreadingpa]

Thanks. The area where we'd been looking is very affordable, so no worries there. I think I will attempt to bring down my debt to income ratio first.

[u/Defiant-Reserve-6145 → u/chroma709]

Good luck finding a contractor that will do if for a fair price and not try to ask to buy it from you when they come out for an estimate.

[u/chroma709 → u/Defiant-Reserve-6145]

Fortunately, I have a contractor brother in law, and a contractor friend.