Want to know my options

[adjusterjack]

How old are your children?

 

[Eccentrica_Gallumbits]

How old are your children?

13 and 16

 

[adjusterjack]

We have had some strained conversations, but overall I think it will be amicable. He's financially ok, owns three other houses, no kids of his own.

That's why I asked about the ages of the children. Maybe you can make a deal with him to carry the note for the $322,000, interest only, at a modest rate, until the kids are 18, or longer if they go to college, then you can sell the house and take your equity to the mainland where you can probably buy a nice house for a lot less money. Just stay out of California.

 

[Eccentrica_Gallumbits]

That's why I asked about the ages of the children. Maybe you can make a deal with him to carry the note for the $322,000, interest only, at a modest rate, until the kids are 18, or longer if they go to college, then you can sell the house and take your equity to the mainland where you can probably buy a nice house for a lot less money. Just stay out of California.

Can you please explain what you mean by carry the note for $322? Totally fine to explain things like I'm five; I have never spent time trying to understand this stuff so have some catching up to go. The deferring settling between us until I've shepherded the kids to adulthood really appeals to me.

And I'm eventually looking at maybe retiring to Mexico, where I can live well cheaply and hopefully still have something to pass on to my kids.

 

[adjusterjack]

I have seen loan modifications mentioned along with hardship. Is that something I could possibly look at?

Loans don't get modified unless you are in default. Which means you quit paying, face foreclosure, and the lender gives you a modification because it's to the lender's benefit.

I could possibly not change anything and feel ok with the situation if renting to a female boarder, as that would feel less odd and risky

Yet still risky and when things go wrong could turn into a nightmare. Avoid renting part of your house to strangers at all costs.

I'm speaking to a lender who suggested an ARM. Especially since the matter of am inheretence is pending, but probably not soon enough to help with the refi. Does that sound like a good option?

Avoid ARMS. Interest rates are likely to continue rising for a while and your payments will get higher and higher until you can't pay them anymore.

Or would it make more sense to get a standard 30-year fixed and plan to refi when possible?

Yes.

Can you please explain what you mean by carry the note for $322?

He would agree that you owe him $322,000 and you can make payments to him until such time as you are in a position to refi or sell the house.

He can write a second mortgage securing the loan and quitclaim the property to you. You keep making the payments on the first mortgage which is already 9 years old and probably at a much lower interest rate.

You and he can agree on whatever terms you want. One example is a 30 year note at 2%. That makes your payments to him about $1728 per month. You can agree to sell or refi in 5 years when the kids are both over 18. You would then owe him about $295,000. Or you can agree to sell or refi in 10 years when you would owe him about $262,000.

You might get him to cut you some slack on the $322,000 because if you sold the house now, for $900,000, you'd pay about $54,000 in realtor commissions which would reduce his share by about $27,000.

You can play around with figures using this amortization calculator.

Mortgage/Loan Calculator with Amortization Schedule (bretwhissel.net)

One more comment. Why are your kids sharing a room when it's a three bedroom house? They are at the age when they need their own space.

 

[Eccentrica_Gallumbits]

Loans don't get modified unless you are in default. Which means you quit paying, face foreclosure, and the lender gives you a modification because it's to the lender's benefit.



Yet still risky and when things go wrong could turn into a nightmare. Avoid renting part of your house to strangers at all costs.



Avoid ARMS. Interest rates are likely to continue rising for a while and your payments will get higher and higher until you can't pay them anymore.



Yes.



He would agree that you owe him $322,000 and you can make payments to him until such time as you are in a position to refi or sell the house.

He can write a second mortgage securing the loan and quitclaim the property to you. You keep making the payments on the first mortgage which is already 9 years old and probably at a much lower interest rate.

You and he can agree on whatever terms you want. One example is a 30 year note at 2%. That makes your payments to him about $1728 per month. You can agree to sell or refi in 5 years when the kids are both over 18. You would then owe him about $295,000. Or you can agree to sell or refi in 10 years when you would owe him about $262,000.

You might get him to cut you some slack on the $322,000 because if you sold the house now, for $900,000, you'd pay about $54,000 in realtor commissions which would reduce his share by about $27,000.

You can play around with figures using this amortization calculator.

Mortgage/Loan Calculator with Amortization Schedule (bretwhissel.net)

One more comment. Why are your kids sharing a room when it's a three bedroom house? They are at the age when they need their own space.

Thank you so much for that explanation. They are sharing a room because my ex has always taken the other one for his music studio, (where he has traditionally spent very close to 100% of his non-eating or bathing time when home while I was with and overseeing the kids' lives - and that's not an exaggeration, hence the very long overdue breakup.)

The kids get along fantastically, though. Thankfully. They're like best friends and have never seemed to mind sharing. It's also very, very common in Hawai'i among the working class. I would obviously prefer to avoid a boarder and give them each their own room, though.

Regarding ARMs, the lender who brought it up said they're not scary like before due to protections that were added after the bust. But what you said makes sense and I'm naturally inclined to avoid them.

I have one other question. When we bought, my ex was in a position to put in more than I did on the down payment, and paid for some repairs, though I offered to split the repairs. My question involves what he said about our current relative equity and how that's calculated.

He said that all of the down and all of any money put in for repairs count dollar-for-dollar toward equity. I've been paying 2/3 of the mortgage due to the agreement we made long ago when he moved in with us, due to there being three of "us" (my kids and I) and one of him. But also when we bought he said that this would give me a chance to even out the initial imbalance of equity, due to his larger down.

I don't recall him saying this before, but he's saying only the percentage of equity from my mortgage payments would add to my equity in the home. So while I thought I was adding substantially to my share of equity each year from paying 2/3 of it, it was in reality far lower. I think he's not looking to nickel and dime me on this, just wanted to check that this is how it's calculated.

 

[adjusterjack]

I see. The wealthy, greedy, expletive, expletive, wants a bigger piece of the pie than he wants to give you.

It's calculated however the two of agree to calculate it.

Sorry, but that's not something the "law" can help you with.

 

[Zigner]

Thank you for the suggestion of HELOC. If I'm reading correctly, I would not qualify because of not enough equity in the home compared to value. Mostly because of crazy inflated value.

I think you've got it backwards. These are random numbers just for an example: If you put down $100k to buy a $300k house 9 years ago, then you started out with $100k in equity. If that house has gone up in value by $500k and is now worth $800k, then you now have equity of $600k (plus whatever payments towards to the principal you made over 9 years). In other words, you have over $600k of equity in a house that's worth $800k. That puts you in a great position, equity-wise.

 

[adjusterjack]

The mortgage balance is $256,000 on a $900,000 estimated value.

Borrowing another $322,000 would bring the debt to $578,000.

Loan to value would then be about 64%.

That would be like putting a down payment of 36% on a home purchase. That kind of equity makes lenders very happy.

 

[Eccentrica_Gallumbits]

I see. The wealthy, greedy, expletive, expletive, wants a bigger piece of the pie than he wants to give you.

It's calculated however the two of agree to calculate it.

Sorry, but that's not something the "law" can help you with.

But don't courts regularly do just that when they determine what's fair for each?

 

[adjusterjack]

I should have said that the "law" can't help you unless you go to court. And all that does is make lawyers happy. And the winner is usually the one with the most money to spend on lawyers.

 

[Eccentrica_Gallumbits]

I should have said that the "law" can't help you unless you go to court. And all that does is make lawyers happy. And the winner is usually the one with the most money to spend on lawyers.

Yeah I get that and definitely DON'T want to go to court. I was wondering, though, if how they look at the issue could be helpful in determining if how he sees it (that only the principal portion of the mortgage payments I've made applies to my equity in the home, whereas all the money for repairs and all of the down applies 100%) is fair. I get that the down is 100%. But the mortgage thing bugs me and the repairs to some extent as well, as some of it wasn't 100% necessary and I know I've read that what you do may or may not pay off when selling your home. But the main thing I'm wondering about is how he's viewing the mortgage payments.

 

[Eccentrica_Gallumbits]

The mortgage balance is $256,000 on a $900,000 estimated value.

Borrowing another $322,000 would bring the debt to $578,000.

Loan to value would then be about 64%.

That would be like putting a down payment of 36% on a home purchase. That kind of equity makes lenders very happy.

Ah ok thank you. I see. I looked into HELOCs again and see that they're like ARMs and that the draw period is pre-set but varies between 5-15 years. I can see that this could be worth doing depending on when I plan to sell. I'd still have to do a refi and quit claim to get him off the loan, so I'd in effect be getting two separate loans, it would seem.

 

[adjusterjack]

Yeah I get that and definitely DON'T want to go to court. I was wondering, though, if how they look at the issue could be helpful in determining if how he sees it (that only the principal portion of the mortgage payments I've made applies to my equity in the home, whereas all the money for repairs and all of the down applies 100%) is fair. I get that the down is 100%. But the mortgage thing bugs me and the repairs to some extent as well, as some of it wasn't 100% necessary and I know I've read that what you do may or may not pay off when selling your home. But the main thing I'm wondering about is how he's viewing the mortgage payments.

So, ask him for a greater share based on your contributions.

Nobody can predict the outcome of that conversation or what a judge would do.

 

[LdiJ]

Yeah I get that and definitely DON'T want to go to court. I was wondering, though, if how they look at the issue could be helpful in determining if how he sees it (that only the principal portion of the mortgage payments I've made applies to my equity in the home, whereas all the money for repairs and all of the down applies 100%) is fair. I get that the down is 100%. But the mortgage thing bugs me and the repairs to some extent as well, as some of it wasn't 100% necessary and I know I've read that what you do may or may not pay off when selling your home. But the main thing I'm wondering about is how he's viewing the mortgage payments.

It is absolutely incorrect that that only the principal portion of your mortgage payments would go towards your equity. You are entitled to a share of the appreciation as well.

You are unmarried joint owners of a property. You would not go to court the way that a married couple would go to court if they were separating. You would file a partition suit. If you could not then agree to a fair apportionment of the equity, the court would auction the home off and give each one of you half of the proceeds after the mortgage was paid off.