Bad debt - vs - no mortgage question.
We own our house - no mortgage - money that my grandmother left was given to us by my parents to payoff the mortgage. We live in a townhouse that was appraised last year at $155,000.
We both contribute 10% with a 3% match to our 401Ks but do not have much in liquid savings. We did have 4 months of liquid savings but my job has been affected by the credit crisis so my pay has decreased over the last 8 months by about 35% while my DHs has not increased nearly enough to make up for my loss. We had to dip into the savings a few times earlier in the year to pay bills.
We have CC debt and student loan debt. It seem to me that it would be wise to use the money in the house to pay-off the bad debt. That way when we want to move the only debt we would have would be mortgage debt but still plenty of equity in the house to use for a downpayment on a new house.
Am I thinking about this correctly? If we did decide to take this route would we go to a broker or to individual banks?