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Equity question


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It is possible that my wife and I will be relocating with work. Because this move would be from the mid-west to the west coast where housing costs are stronger, my employer is offering housing assistance which is a zero interest loan to cover the down payment. This would be payable with termination or future sale of the home.

We purchased our current home for $275K and had made approximately $70K in improvements. We have paid cash for all improvements, no additional loans against the home. Assuming we could sell the house for $345K and recover our investment for improvements, could we use this money to pay off our car loans or would we be required to reinvest this in our new home?

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Basically, it is your money. You can do what you'd like with it. As long as you lived there for two years, you can take advantage of the capital gain exclusion and do no owe taxes on the gain between your cvost basis and your net sales price.

So now you are going to a more expensive market. You'll probably have to use that money for part of your down payment. But, if you have high interest car loan debt, then you may do better off financially paying it off (but not if it causes ou to pay MI every month). You'll need to balance the need for a down payment to get the best rate with the goal of reducing non-deductible high interest debt first.

So, you can do what you want with the money. But be careful not to strap yourself going into a more expensive market. Even though the west coast has corrected some, it is still pricey.

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