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Hope all is well with you. I have a question about the best…

Hello,Hope all is well with...
Hello,Hope all is well with you.
I have a question about the best way to go about paying our medical. My wife has had 2 hip surgeries and we do not have insurance, there maybe a 3rd on the way. We have accumulated around 25k worth of medical bills and with the possibility of a 3rd it may end up 35k. I was what the best way to pay this debt off?
We have a rental house that has about 40k or so in equity right now and a 401k that has about 20k. So we were wondering what the best way to go would be. Either refinance the house and get part of the equity out or the 401k or another avenue, that you may know to be a better choice.
Thank you for your time,
Ken
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Answered in 2 minutes by:
10/17/2017
PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 5,125
Experience: Tax professional and business consultant for 35 years.
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I would consider selling the rental house, not refinancing. Once you extract the equity, your rents might not pay the mortgage loans. Sell, and use whatever you get to settle with the hospital and doctors/rehab/others.

Leave the 401(k) alone.

My take is different, because you might have to income qualify for a new loan on the rental. The medical bills will impact your credit, making new loans tough if not impossible.

Thanks for asking, and I hope this is advice that works for you.

Positive feedback is appreciated. I'm PDtax.

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Customer reply replied 10 months ago
Thank you for the feedback. We aren't currently in trouble as of yet, just trying to decide the best outcome for the future. Our income is a little North of 180k and are able to maintain, keep up with the payments, thus far and have a 0% financing with the hospital on the bulk of medical bills thus far. With the 3rd one being a possibility we would like to knock the debt out, before incurring even more or at least a good chunk.
Rental house is at 5% we have a tenant ( contractor) that covers most of the mortgage and is fixing the house up, per agreement of the discounted rent. We owe 108k on the house, appraises for 180k. With that information and interest rates being around 4% , would your advise still be sell the rental house?

Yes. Your income is enough that you won't have to liquidate any assets. And you likely won't be able to negotiate any disouc**ts on the bills.

But I don't like the 'special deals' that put people in charge of fixing up homes for rent discounts, which you are subsidizing by paying some of the mortgage. That makes no sense to me at all. Paying on the rental house and can't pay your bills? Sell it.

PDtax

PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 5,125
Experience: Tax professional and business consultant for 35 years.
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