Q: I inherited a home, mortgage free. The house is worth about $250,000, but in need of many repairs. I have no money, and I am in debt for about $30,000, according to my credit report. I have a credit score of 530. Is there any way I could borrow money? I am drowning. Please help.
A: You have two solutions.
First, if you have income, you may be able to refinance the house and pull out enough of the equity to make needed repairs and pay off the $30,000 in debt. That, of course, would be if you get a loan.
I don’t like this first choice that much, because if you are having trouble making payments on $30,000, how will you handle a home equity loan? Now, it’s possible the payments may be more manageable because of a lower interest rate and the fact that they may be stretched out for 10 to 15 years.
Please only consider this if you truly can make the payments—and on time.
Your second option is to sell the house as is. Find a good real estate agent who will help you find financially stable buyers willing to buy your house without you having to spend money you don’t have to fix it up. This may mean you have to lower your asking price to compensate for repairs a buyer will have to make. The house may not be worth $250,000 if it needs as many repairs as you say.
Given the two choices, I might just refinance, especially if you need an affordable place to stay in New York.