The biggest problem with what I have you are proposing (using your equity to pay off other debt) is that it doesn’t seem like you asked yourself (a) how you got into the other debt to begin with and (b) what are you going to do differently so that you don’t repeat that again if you do decide to sell your home and use the money to pay off your debt.

Imho,

1) I would take option#1 and live as frugally as you can.
2) Option#2 would be something I think you should NEVER do. I would NOT turn your home into a piggie bank and take out a HELOC to pay off other debt that doesn’t generate incoem. All you’ve done is just shift your debt elsewhere to something that a creditor can go after: your primary home.
3)Option#3: you’ll still need a place to live, and you probably should figure out how much rent cost will be, versus how much your monthly mortgage+property tax+insurance/etc is less tax deduction.

Do not get excited about the equity in your primary home. Otherwise you run the risk of being exactly like the other americans during the earlier real estate meltdown when they decided to atm their home to death…That is, unless you don’t mind selling your home to people like me looking to buy a distressed property going through short sales.

Pretend the equity doesn’t exist, and make your financial plan accordingly.

Do you have kids? i.e. are you tied to schools and bedrooms?

If not, you have about $200k of equity, right? Buy a $200k condo with 50% down, use the other rest to pay off debts and as a financial cushion.

You should end up with $200 taxes + $250 hoa + $450 loan + $50 insurance. Under $1000/mo nut. Maybe pick up another rental property somewhere to further reduce that if you can put 25-30% down.

spd, how about some examples of $200k condos that would be suitable for this family?

Please do not construe this as advice, but, after reading your post, my thoughts are, as flu mentioned, that Option #2 is definitely a bad choice for many many reasons, and may end badly.

If you choose Option #3, and sell your home, you need to ask yourself where you are going to live, and how much that will cost you versus your current situation.

At your entry price point, you are going to have a difficult time finding something as reasonably priced–if you plan to stay in San Diego–and you may actually end up spending more for housing than you are now.

This brings us to Option #1. If you plan to stay in San Diego–and this is key–it seems your current housing expense is quite reasonable for the area. Unless you really want to downsize, imo, you’re going to have a hard time finding a less expensive place to live–even if you rent. If you choose Option #1, perhaps you could consider a roomate, or taking on additional jobs, etc. until you pay off some of your bills.

Ultimately, the question is whether you can afford your lifestyle or not, and that is a question only you and your family can answer. I wish you the best.

Stay where you are.

Buy THE TIGHTWAD GAZETTE.

Cut expenses to the bone.

Assuming no kids (schools), living in a “poor” area isn’t necessarily much worse. Most crime isn’t random. As long as you don’t involve yourself in things that you shouldn’t be involved in anyway (hard drugs, gangs, hookers), the likelihood of being messed with is low.

I knew a nice lily-white Jewish girl who lived in Spanish Harlem in the early 2000s — she said the only time she was robbed was after visiting a friend in a nice part of the West Side.

The “transaction costs” of selling and then renting or buying a cheaper place are huge. Commissions, fixup costs of the house, searching for a replacement, the cost of moving & downsizing possessions, school changes if you have kids–the list goes on and on, and the costs are psychic as well as monetary.
And you would be throwing away a terrific 30-year loan. By owning this house for only four years, your net worth has increased by $170,000. Let it ride and it will probably keep growing.
Instead, attack your expenses with a vengeance. Live under a budget.