Mortgage question- with ex girlfriend
Question: Several years ago (2002), being engaged and wedding plans in place, my girlfriend and I bought a home together. Both names on the mortgage.
And of course, things didn’t work out quite like we had hoped. After six months of BOTH paying the mortgage, I took over all payments due to
some personal situations. We tried to make things work a few times, but long story short- it didn’t.
Now I’m wondering what she is entitled to as far a “buyout”. I don’t think I’ll have a problem qualifying for the mortgage in my name alone.
I’ve made some nice home improvements that I’ve paid for.
We split costs for about the first six months. And in the last 36 months since then, I’ve taken over ALL costs associated with mortgage, insurance, utilities, home improvement projects, etc.
With the increased value of the house, what is a ‘fair buyout’ so I can
move forward and get the house in my name?
Answer: what is purchase price of home? how much was put down? how much was financed? what is the buyout price on loan (estimate principal balance left)
if there was a second mortage taken out, please include all of above for 2nd mortgage too.
the above is the “minimum”. The principal amount paid on the loan should be split 50-50 at minimum.
Then factor in the improvements. From a legal standpoint if you think she’ll challenge you, she may get 50% of the improvements. It might not be fair, but it might happen. Contact a real estate attorney.
at misc.invest.financial-planning there may be some other people which could guide you. Try posting there. First, tell your story to an experienced real estate attorney.
What you can expect has every bit as much to do with your relationship with your ex-girlfriend as it does with the property itself. Whatever might be “fair” is really a matter of agreement between the two of you. If you’re still on good terms, then it might be fairly easy to reach an agreement. If either of you has any thoughts about “getting even” with the other, then it might turn into a big, nasty, expensive fight. Also, even if you’re on good terms now, introducing the idea of settling this property might change the whole dynamic between you.
Your goal should be to acquire a Quitclaim Deed. That is basically a legal statement by one of the parties who shares an ownership interest that they are relinquising that interest. The main issue is the compensation that you will make to your ex for that deed. Also, since there’s a mortgage, if you & your ex are both listed on the mortgage as co-borrowers, you’ll need to refinance.
There are two issues that you need to consider: How much is the property worth, how much is the current payoff on the mortgage, and how much do each of you have invested in it? Whatever equity there is in the property is owned by both of you jointly & needs to be split somehow. What I’d do in such a situation is to calculate the relative shares that each party owns in the equity, proportional to their investment, & make the other party an offer. How easy or difficult you want it to be for her to say “Yes” to your offer is dependent on your personal goals with regard to the matter (as well as hers):
– Do you want to get it all over with, quickly, with the minimum amount of fuss? – Do you want to “stick it to her”, or she to you? – Do you want to try to squeeze every dollar out for yourself?
Each party’s investment should be easy enough to agree on. Each of you should have cancelled checks & other records. Do not count any of what you have paid for in improvements. That money is gone, plus you’re going to be the beneficiary of it anyway, since you’re keeping the house. The value of any improvements is reflected in the value of the property itself anyway, so don’t count it here.
The value of the property may be a sticking point, but must be agreed upon. You can pay for an appraisal (you may need one anyway, to refinance), but you’ll both have to agree in advance to abide by the appraiser’s valuation – or, worst case, order multiple appraisals & choose the best/worst/average. There’s plenty of opportunity for haggling over who gets to pick the appraiser(s), etc. if you’re so inclined.
The agreed-upon value of the property, minus the mortgage payoff, is the equity. You may want so subtract the costs of getting it all done, such as the origination fees, etc. on the new mortgage, appraisal & attorney fees, etc. You may divide what’s left by the ratio of your ex’es investment to yours, & consider that to be a “fair” settlement offer – or at least a point to start negotiations.
What if there is no equity to divide?
What if the ex wants to maintain a share of ownership, in the hope that eventually the value of the property will increase & she will have a share of something that has more value to be taken out?
What if she just wants to be difficult, or has her own attorney that’s more interested in generating billable hours than in getting the whole transation done quickly & easily?
A good attorney will probably find more issues to consider, not to mention knowing how to structure the whole deal to protect your interests & prevent “surprises”, & will be well worth whatever you pay.
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