In a financial bind, some people sell their house to get out of debt. Whether you own a second home, plan to sell your house and rent instead, or are considering downsizing, making the decision to sell your house to pay off debts may not be easy. But, neither is struggling with high interest rates and steadily increasing debts.

When Can Selling a House to Pay Off Debts be a Smart Decision

Sometimes, selling a house to get out of debt can be the best decision for your situation. For instance, if:

1. You can’t afford your mortgage payments and refinancing is not an option. You may be behind on payments and facing foreclosure, or the payments are so high that you would save money each month by renting.
2. You need to pay off debts and could easily downsize. Buying a smaller, more affordable home makes more sense for your current situation.
3. You own or inherited a second home. You’re deeply in debt and need immediate relief. You don’t want to deal with tenants, so selling the second home is an easy, smart decision.
4. You are behind on property taxes and HOA fees, or they are simply too high. With your debts continuing to grow, you’re unable to get ahead. You could lose your property.
5. You’re living paycheck to paycheck and your income is less than what you owe each month. Paying off debts with high interest rates would increase your cash flow, enabling you to save money while renting. Once your finances improve, you could consider buying another home.
6. You’re in a financial bind and have no other alternative. You must sell the house quickly, pay off some debts, and improve your financial situation.