Divorce, refinancing gut check

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Well maybe the structure is all done and baked but usually you’d expect some opportunity for both sides to structure things ok— maybe he keeps his retirement accounts in exchange for selling the house cheap, or maybe she could give him some of her/ borrow against hers to buy it out.

Op again - I did negotiate down the buyout amount in exchange for retirement so he's not getting 50% of the equity - we agreed on a set dollar amount. IMHO he is still winning out financially but it is at a level I was willing to live with.

I don’t think you have any great options here, and this is very common for women who don’t want to give their marital house, but I fear this will be a mistake in the long term. You said the appraisals for the house were high. You are trading an asset (real estate) that is valued at the top of the market for assets (stocks) that are devalued right now. It is much more likely that the value of the house will remain stagnant and the stocks will increase in value over the long term, especially vis a vis inflation. Meanwhile, you’ll be spending all your $$ paying interest & maintaining the house & growing very little equity over the course of your new mortgage & not saving for your own retirement. Not to mention 3 more college tuitions. So many women trade long term retirement security for maintaining their short term standard of living and live to regret it for many, many years.

Pension benefits are often dependent on her exH being alive. That’s how it was with my exH plan.

[Anonymous]

When you change schools, you have alot of other issues to deal with pertaining to the kids. How many more years for the kids before they head to college? Are the pending plans for them to be away for college? If it is less than 5 years, I would just downsize now. How are their college funds?

But, $1500 is alot. Any money coming from the ex? Probably no alimony but any child support? Will it add up to $1500 a month?

Whatever you do, don't tap into your savings or your retirement.

On a side note, i don't understand why you want to keep the house, so much memories there. Start new and fresh.

I would downsize after the kids have gone off to college-hoping they would not be coming home all at once after college to live with you. You know that happens sometimes.

[Anonymous]

Anonymous wrote:When you change schools, you have alot of other issues to deal with pertaining to the kids. How many more years for the kids before they head to college? Are the pending plans for them to be away for college? If it is less than 5 years, I would just downsize now. How are their college funds?

But, $1500 is alot. Any money coming from the ex? Probably no alimony but any child support? Will it add up to $1500 a month?

Whatever you do, don't tap into your savings or your retirement.

On a side note, i don't understand why you want to keep the house, so much memories there. Start new and fresh.

I would downsize after the kids have gone off to college-hoping they would not be coming home all at once after college to live with you. You know that happens sometimes.

Op here. No child support or alimony. Split custody, splitting costs. I can withstand the memories in the home if it means my school aged kid can stay put in school and I can build equity and make more money off of this in the future... That's my thinking. I've already dipped into savings to cover divorce costs and will likely need to dip into it again if the side work does not pan out. (If it doesn't pan out, it will be because I am too burnt out and can't find the time, but I should be able to make the time.) The tradeoff with downsizing is that I definitely wouldn't get as much house for the "price" I am buying him out, or in as good of a public school district. The upside to selling/moving is that I'd free up more cash in the short term. I am trying not to resort to renting because I want to build wealth in something. The biggest risk, I believe, is if rates don't drop in time for me to refinance before the adjustable rates kick in. I am eyes wide open on general advice and general trends for women getting divorced. I am trying to avoid financial devastation although it seems like it's going to be a hit either way, it's just a matter of what I'm willing to gamble...

Thank you all for talking this through with me. Strangely, I trust the collective anonymous wisdom here more than many other places...

[Anonymous]

At the rate you quoted, I would go with an ARM mortgage if you decide to stay put.

[Anonymous]

Keep the house. Do the ARM

I got divorced in 2020 when there was no housing. I stupidly listened to conventional advice (a woman should never keep the house in a divorce .... it is a huge financial mistake)

On the contrary...not keeping the house has been the biggest financial mistake of my life.

My ex kept it. He did not buy me out of the full 50%. He now has 400k more equity because the value of the home went up about 400k during covid.

I bought another house, not at all comparable, for more money in 2021. This house is 5 min away but not in the school zone. I could not find housing in the school zone. I also have had major unforeseen maintanece and repair issues...I had an inspection. I have spent 17k in repairs since I bought and now have to spend 20k more. I could not sell my house now without making these repairs. I am paying more for less house and now have these major additional expenses. I essentially had to start over, pay more while my ex kept the house, gained equity and did nothing.

I considered trying to keep the house but my divorce attorney talked me out of it. Biggest mistake of my life.

I have also paid moving costs, closing costs and furniture costs that are not in the figures above. it would have been cheaper or me to rent at 4k a month at this point.

Moving to the unknown can really cost you. Keep the house and do the ARM. Refi later or move before the term ends.

[Anonymous]

Keep the house OP. My DH makes $130K. Our PITI is $3.8K. We have 3 kids (and are done). Its fine. We do county rec sports. The kids are in good schools. We don't go on many international vacations, but that is ok. Your DH might be a slacker and not keep up paying half of your kids' costs, but even if he doesn't you'll still be happy in your house. Really, the space you live in is a very personal choice, but after years of very cramped living we finally made the choice to have more space in our daily living and less savings. While it may shock DCUM, we're still on track with retirement.

WRT whether a woman should keep the house, I guess my parents situation may be unusual but I'll share anyway. Mom kept the house. Judge said that when the youngest child was 18 mom would have to buy dad out of the house. I have no idea whether they used the year of separation, divorce, or youngest child turning 18 as the year the house was appraised. My dad was a huge slacker in many ways and only paid child support when the state could find where he was employed and reduce his take home pay. He usually lasted only 6 months at any job. When the time came for mom to buy out dad, his share was wiped out by his child support debt. He would never have been able to pay what he owed her so at least she got a house which has appreciated 450%-500% since they bought in the mid 80s. If mom had bought out dad when they divorced, dad would have wasted the money.

[Anonymous]

Someone else probably suggested this already, but could you rent out a room in the house or in the basement? Not ideal I know but a way to bring in several hundred dollars a month.

[Anonymous]

You need a better lawyer. My old neighbor got divorced when kids young and agreement was he would pay 100 percent of cost of house taxes, insurance till youngest kid 21. She would do repairs. At that town house sold and split.

She also could only work part time till youngest 18 as such he made up difference.

She also got half of money.

But he paid no alimony and the deal ended in 2021 that started in 2008 and lucky him house shot up in value

They both won.

Or my wife’s friend used the huge rock on the back approach. She quit work. Hit the gym, got new clothes, new makeover, then he left her as could not handle Rock. She took him to cleaners and remarried rich

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Well maybe the structure is all done and baked but usually you’d expect some opportunity for both sides to structure things ok— maybe he keeps his retirement accounts in exchange for selling the house cheap, or maybe she could give him some of her/ borrow against hers to buy it out.

Op again - I did negotiate down the buyout amount in exchange for retirement so he's not getting 50% of the equity - we agreed on a set dollar amount. IMHO he is still winning out financially but it is at a level I was willing to live with.

I don’t think you have any great options here, and this is very common for women who don’t want to give their marital house, but I fear this will be a mistake in the long term. You said the appraisals for the house were high. You are trading an asset (real estate) that is valued at the top of the market for assets (stocks) that are devalued right now. It is much more likely that the value of the house will remain stagnant and the stocks will increase in value over the long term, especially vis a vis inflation. Meanwhile, you’ll be spending all your $$ paying interest & maintaining the house & growing very little equity over the course of your new mortgage & not saving for your own retirement. Not to mention 3 more college tuitions. So many women trade long term retirement security for maintaining their short term standard of living and live to regret it for many, many years.

Pension benefits are often dependent on her exH being alive. That’s how it was with my exH plan.

That’s not always true, and from the context, it sounded like she is trading retirement savings (qualified funds) for equity in the house (which is what most people do, even though it’s a mistake).

[Anonymous]

Anonymous wrote:Keep the house. Do the ARM

I got divorced in 2020 when there was no housing. I stupidly listened to conventional advice (a woman should never keep the house in a divorce .... it is a huge financial mistake)

On the contrary...not keeping the house has been the biggest financial mistake of my life.

My ex kept it. He did not buy me out of the full 50%. He now has 400k more equity because the value of the home went up about 400k during covid.

I bought another house, not at all comparable, for more money in 2021. This house is 5 min away but not in the school zone. I could not find housing in the school zone. I also have had major unforeseen maintanece and repair issues...I had an inspection. I have spent 17k in repairs since I bought and now have to spend 20k more. I could not sell my house now without making these repairs. I am paying more for less house and now have these major additional expenses. I essentially had to start over, pay more while my ex kept the house, gained equity and did nothing.

I considered trying to keep the house but my divorce attorney talked me out of it. Biggest mistake of my life.

I have also paid moving costs, closing costs and furniture costs that are not in the figures above. it would have been cheaper or me to rent at 4k a month at this point.

Moving to the unknown can really cost you. Keep the house and do the ARM. Refi later or move before the term ends.

Do you really think the real estate market in 2023-2024 is going to see the stratospheric value increases seen in 2020-2022? If you do, you’re the only person in the US who does. OP is making the mirror image of your mistake. She’ll be paying the inflated 2022 price to her soon to be ex and watching her value drop, or at best, stagnate.

[Anonymous]

I wouldn’t do an arm unless you expect an increase in income bcs no one knows where interest rates will be — you don’t want to do this and then have to move bcs of interest rates.

[Anonymous]

When I divorced, I kept the house and assumed the mortgage instead of refinancing. I had to do it through the existing mortgage company. It's been awhile but I think there was paperwork and a fee and it took some time but it kept my payment the same and my ex is off the books completely. Not sure if you've tried this, I only read the first page, but assuming the mortgage through the mortgage company does NOT keep you linked to your ex at all.

[Anonymous]

Anonymous wrote:When I divorced, I kept the house and assumed the mortgage instead of refinancing. I had to do it through the existing mortgage company. It's been awhile but I think there was paperwork and a fee and it took some time but it kept my payment the same and my ex is off the books completely. Not sure if you've tried this, I only read the first page, but assuming the mortgage through the mortgage company does NOT keep you linked to your ex at all.

How did you pay them their share of the equity?

[Anonymous]

Anonymous wrote:I am going through a divorce. He has agreed to let me buy him out of the house, sfh colonial style 4br in a good exurb school district where most homes are exorbitantly high or smaller split levels...so I believe the value will go up.
The rates are obviously high. I locked at 7.125% for a 30 yr conventional. I was approved but haven't closed yet... My monthly mortgage payment will go up by 1500. I'll still have over 20% equity in the home. This would put monthly mortgage at 3600. My salary is 149k. For the same mortgage I would not be able to get as good of a house in as good of a neighborhood, plus I'd like to keep my kids in the same schools.
Now I'm rethinking whether this is the best way to go. While my gross salary makes it all seem doable, I don't feel like I have an extra 1500 laying around per month??! (Finances are already split with stbxh)
Should I consider doing an ARM instead? Should I sell instead? Should I just plan to do more side hustling and get more income? (Not completely undoable - I did contract work before)
I don't know if this is even enough information to advise. I'm tired of thinking.

Some mortgages are assumable. I'd check carefully if your old mortgage is. If so, try to assume the loan. I think generally FHA mortgages are assumable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:When I divorced, I kept the house and assumed the mortgage instead of refinancing. I had to do it through the existing mortgage company. It's been awhile but I think there was paperwork and a fee and it took some time but it kept my payment the same and my ex is off the books completely. Not sure if you've tried this, I only read the first page, but assuming the mortgage through the mortgage company does NOT keep you linked to your ex at all.

How did you pay them their share of the equity?

We didn't have much equity as we had just bought it. But fortunately I had some cash to cover what we had.