1. A primary residence isn’t sacred. It’s an investment like anything else. Nothing wrong with selling it and downgrading.
2. You save $30,000 right there if you don’t use a broker. Go with a discount agent, let the title agency handle the sale. Done. I don’t see why closing costs should exceed $10,000 without a broker involved.
3. Who says there’s only $170k of equity? I’m assuming the OP has paid some principle and also had a down payment on the residence. He should get that back as well.
4. If he buys a 2/1 outright or nearly outright, he can live for $1000 per month. Maybe $500 per month if he’s lucky. Then he’ll have a whole lot of money to pay off debts and a condo that can be paid off in 10 years, if not immediately.
5. Paid off debts + small housing nut will mean that he’ll be able to save to buy another investment soon. Or just work less and travel a lot. Living below one’s means rocks.