What to do?

[radio_flyer]

What is the name of your state (only U.S. law)? NC

I am unhappy in my marriage and looking to the future when I can end it. We have some credit card debt that I am working had to pay off now, so no debt will come with me. The issue is this house. We bought it 6 months ago, just before the economy tanked. We only put 3% down, and I feel like we probably owe more than the house is worth at this point. If we were able to sell it in this market, we'd still owe the bank money. Now, I can afford to keep it on just my salary, while he could not, and I want to protect my credit. Could I ask him to leave and just walk away even? I know he would get half the equity, but there is none.

Or, should I save money for a down payment for a new house (in an account in a friend's name), leave him and the house, get my separation paper's, buy the new house, then hand the keys to this house to the mortage company? I know my credit would take the hit, but what else could happen to me? Could they force me to pay on the first house? Could they take the 2nd house?

I'm trying to figure out which path will work out the best and I hope ya'll can help give me insight. Thanks!

 

[Ohiogal]

You can NOT hide money in a friend's account. That is called FRAUD and can nail you in the divorce.

 

[mistoffolees]

What is the name of your state (only U.S. law)? NC

I am unhappy in my marriage and looking to the future when I can end it. We have some credit card debt that I am working had to pay off now, so no debt will come with me. The issue is this house. We bought it 6 months ago, just before the economy tanked. We only put 3% down, and I feel like we probably owe more than the house is worth at this point. If we were able to sell it in this market, we'd still owe the bank money. Now, I can afford to keep it on just my salary, while he could not, and I want to protect my credit. Could I ask him to leave and just walk away even? I know he would get half the equity, but there is none.

Or, should I save money for a down payment for a new house (in an account in a friend's name), leave him and the house, get my separation paper's, buy the new house, then hand the keys to this house to the mortage company? I know my credit would take the hit, but what else could happen to me? Could they force me to pay on the first house? Could they take the 2nd house?

I'm trying to figure out which path will work out the best and I hope ya'll can help give me insight. Thanks!

As Ohiogal says, you can't put it into a friend's name without getting into a lot of trouble.

Beyond that, it really isn't going to matter much. Let's say you manage to save $10,000. If you put that into a savings account, you get half and your husband gets half. If you use it to pay down the mortgage, it reduces the mortgage balance by $10,000, saving you and your husband $5,000 each.

If your name is on the mortgage, the bank can most certainly force you to pay the mortgage - whether you own a second home or not. If your name is on the mortgage, you may not be able to get a second home at all.

If your name is NOT on the mortgage, the bank won't force you to pay, but it will certainly be an obligation in the divorce proceedings. If one of you wants to keep the house and can afford to buy the other one out, that's fine (make sure your name is off the mortgage before signing a quit claim deed). If neither of you wants (or can afford) to keep the house, it will need to be sold and you're going to each pay 1/2 of the shortfall.

It's hard to say what the 'best' thing is. Ordinarily, paying off credit card debt makes the most sense, but if you're moving out, you'll have a lot of new housing expenses. You will need a cash reserve for that, or you can use a credit card that's in your name.

 

[radio_flyer]

As Ohiogal says, you can't put it into a friend's name without getting into a lot of trouble.

Beyond that, it really isn't going to matter much. Let's say you manage to save $10,000. If you put that into a savings account, you get half and your husband gets half. If you use it to pay down the mortgage, it reduces the mortgage balance by $10,000, saving you and your husband $5,000 each.

If your name is on the mortgage, the bank can most certainly force you to pay the mortgage - whether you own a second home or not. If your name is on the mortgage, you may not be able to get a second home at all.

If your name is NOT on the mortgage, the bank won't force you to pay, but it will certainly be an obligation in the divorce proceedings. If one of you wants to keep the house and can afford to buy the other one out, that's fine (make sure your name is off the mortgage before signing a quit claim deed). If neither of you wants (or can afford) to keep the house, it will need to be sold and you're going to each pay 1/2 of the shortfall.

It's hard to say what the 'best' thing is. Ordinarily, paying off credit card debt makes the most sense, but if you're moving out, you'll have a lot of new housing expenses. You will need a cash reserve for that, or you can use a credit card that's in your name.

I can afford to pay for the house. My income is twice his. He couldn't make the payment, but I could.

Since there is no equity, what am I looking at for buying him out? I could refinance in my name alone.

As miserable as I am, I'm not going to commit financial suicide. He is enjoying letting me be another mommy for him, and seems content, so I know he's not going anywhere. He doesn't realize (or care?) that I am so unhappy. If I have no choice but to stay, I will. I'll somehow find the strength to suck it up.

 

[mistoffolees]

I can afford to pay for the house. My income is twice his. He couldn't make the payment, but I could.

Since there is no equity, what am I looking at for buying him out? I could refinance in my name alone.

As miserable as I am, I'm not going to commit financial suicide. He is enjoying letting me be another mommy for him, and seems content, so I know he's not going anywhere. He doesn't realize (or care?) that I am so unhappy. If I have no choice but to stay, I will. I'll somehow find the strength to suck it up.

Since you make plenty of money to support yourself, staying or leaving should not be a financial decision. You may want to speak to a counselor to help determine what you should do.

From a legal perspective, your situation will be fairly clear cut as far as the house is concerned. If he can't afford it, then there are only two options - you keep it and take on all the debt or you sell it - and jointly share in any gains or losses.

If you decide to keep it, you need to give him 1/2 of the equity (or he needs to pay 1/2 of the amount that the loan is underwater). Unless the two of you agree on an amount, you will probably need to hire a qualified appraiser to give a real appraisal of the home's value. That will determine who owes what to whom. If you agree on an amount, then you just split that.

The problem you're likely to face is that it's going to be hard to refinance a home that's under water. You'll probably need to add some cash to meet their equity requirements. Alternatively, your ex may allow you to keep the house without refinancing for some period of time. His attorney may strenuously object to that or may let it slide - it all depends on his personal views and his attorney.

 

[LdiJ]

I think that you keeping the house makes the most sense, for both of you credit-wise and financially, even if that means putting off the refinancing for a couple of years to give the market a chance to recover.

I would recommend getting an official appraisal of the house, to see exactly where you stand, equity-wise. You are correct that you are probably upside down on the house right now. Therefore, if you had to sell it you would either both have to come up with extra cash at closing, or you would take a serious credit hit in a short sale.

If you can demonstrate to him, and his attorney, that you will both be better off if you keep the house, then he may agree to that. You could exchange his share of any negative equity in exchange for him staying on the mortgage for XX amount of time.

 

[Ohiogal]

Actually if she is keeping the house she would be responsible for the negative equity most likely.

 

[LdiJ]

Actually if she is keeping the house she would be responsible for the negative equity most likely.

Yes, but if its sold they both have to either take the credit hit or come up with cash, so its a fair exchange.

 

[Ohiogal]

Yes, but if its sold they both have to either take the credit hit or come up with cash, so its a fair exchange.

Yep. True. Agree.

 

[radio_flyer]

Thanks, guys. I don't really like or want to house, but I am thinking first of my 10 yr old son (my son not his) and what would make this easier on him, and second, what would make the most sense financially. I am 46 and can't keep reinventing the wheel.