As mentioned in a few recent threads, my gf of almost 10 years recently left me - well, broke up with me, but is still living in our house.
We bought the house together 3 years ago and are upside down in the mortgage. This hadn’t bothered me, as we planned to live here for quite some time. However, she wants to move out on her own. At this point I want her gone. The problem is, we are both equally responsible for the debt and payments, to be fair.
She has very little savings, and does not earn enough to pay for rent and half a mortgage payment at the same time. So this is where I am stuck. If I let her just walk, suddenly I am left paying the mortage by myself, or having to cut a huge check upon any sale to cover the gap in value vs. mortgage balance. In a perfect world she’d just pay me some large agreed upon amount, and she could go. Or we’d sell and split that gap cost (less my downpayment I would think).
So, I’m wondering if anyone has any creative ideas here. In order to get on with my life after this, I need her to move out. However, I just don’t think its fair at all that she walks away from her finanical responsibiilty, while I take on all of it. It would be a stretch for me to make payments myself, or would wipe me out completely if I sold. She’d really be fine, as her half of payments would cover her new rent just fine.
Truly, the only thing I can see is she would need to borrow a very large some of money from her mother or a bank and pay me or put it toward that gap payment upon a sale. I don’t know if she’ll agree to that or not.
I’d really like to find a way that fair, that doesn’t hurt either of us too much financially, so we can both go on with our lives and find happiness. I’m avoiding getting a lawyer, forcing a sale, etc. until all options are exhausted.
A lot of banks are doing “short sales” these days, maybe you could sell it for what you owe on it that way?
What about taking over the mortgage yourself, refinancing it in your name at a lower rate, and renting out half the house (getting a roommate) after she leaves? Eventually the market will recover, and you’ll come out on top with all the equity for yourself.
Short sale is an option - thanks. Guess it can’t hurt to at least contact my bank.
Taking on the mortgage myself would be tough, as I’d have to pay that large difference in value vs current mortgage to get it in my own name. So payments would be lower, but I’d spend every last dime of savings. I udnerstand that if I do that, after prices come back I get the equity, but in reality they would have to come all the way back up to pass the short, down payment (all me), etc. before it was really a long term financial advantage to me. Still a good thought, Ill think about.
Don’t think I can do a roommate. After 9 years living with her, I think I want to live alone for a while.
If you can’t stand the thought of a roommate, perhaps you could do the takeover and refinance, then rent out the WHOLE place for your mortgage payment + a bit of profit, and rent a small place somewhere else for yourself until the market recovers or whenever. It would save you from having to take a loss and give you options later to sell for a profit (or at least break even), or move back in. In the meantime the place will pay for itself and earn you some extra money. Certainly a tradeoff given the headache being a landlord can be, but just something else to think about.
I think if you take over the whole mortgage you are going to get the short end of the stick. There will be a lot of hidden costs and risks that you will take on yourself. You might have to refinance which comes with costs.
I like DCnDC’s opinion of you both moving out and renting the whole place. Is renting a house a viable option in your area? You could conceivable keep the current mortgage as it is – with both your names on it. If you are concerned about still being tied to her through a mortgage, you could hire a rental agency to manage the property.
Another option as you said is to sell it for a loss, come up with your half of the difference, and get her to come up with her half somehow. She won’t be able to take a loan out for her half so she would have to get it from some place like her mother.
I’m not sure what your ex- is like and if she is a selfish person. A selfish person would probably want to move on to their new life with no strings attached. To do this, a selfish person would try to get you to take on the full mortgage, possibly by paying you a bit now and promising more in the future when they “get on their feet”. If you think she is this type of person, then it would be best to terminate the mortgage and get out of there.
Bad move. Also probably foolish and potentially expensive. Property law varies from jurisdiction to jurisdiction. You need to talk to someone licensed in your jurisdiction to determine what your options are, and which of those are actually workable.
That would be tough to do - a simple “loss” sale (where you take cash to closing to get out from under) would require, well, there to be that amount of cash. If OP can scrape up half but girlfriend can’t, the bank doesn’t care - they won’t release their lien on the place until they get their cash.
Now, a short sale where the bank agrees to take what you can get for the place, is different. Nobody needs to dig up the cash for that. Of course, short-sales are from everything I read a HUGE pain in the neck. Oh - and depending on the state you’re in (I assume this is in the US), the bank might still come after you and GF for the difference.
Tough to do when he’s underwater - the bank won’t finance for greater than the value. There might be some loan modifications available with all the programs that might help out there, but I don’t know much about it.
Is the girlfriend on the deed to the house? Is she a co-signer on the mortgage? I’m assuming yes to both. If not, then she has zero reason to work with you on anything, unfortunately.
The way I see it, the options are:
[ul]
[li]Get a roommate to share expenses (OP has stated he’d like to live alone at this point and I can’t say as I blame him)[/li][li]Short sale[/li][li]Continue with status quo and try to scrape up the money to keep paying the mortgage[/li][li]Refinance at today’s lower rates (tricky to do with upside-down but perhaps you can scrape up cash to do so somehow). That’s the only way you can get the girlfriend off the deed to the place if she’s at all smart - she shouldn’t sign over anything until she’s also free of financial obligations. You can use the financial obligation (if she’s on the mortgage) as leverage to get her to come up with cash to help buy down the gap - the threat being you’ll let the place start into foreclosure and play hell with her credit rating.[/li][/ul]
If you were able to refinance - say, 100% of today’s market value, at today’s rates, could you afford the payment then? If not, then you need to get out of the house, or get a roommate.
Have you had any discussions with her about the house and the mortgage? What’s her initial response? You don’t have to solve this problem yourself. It’s just as much her problem as it is yours.
Please tell me that both of your names are on the title and mortgage. If it’s just you, you may be screwed without getting an attorney involved.
That’s my thought, too - you don’t buy a house with someone and live in it for three years then expect to just walk away scot-free and leave the other person holding the bag. I also think you need to get a lawyer involved here - the most fair solution would be to sell the house, with each of you taking your half of the amount owed, and whoever paid it getting their down payment back out.
A friend of ours is in a similar situation - she just called off their engagement, and is still living in the house she bought with her ex, trying to sell it. It’s not great for either of them, but they realize that they have to unload the house they bought together to move on.
IANAL or anything but several posts are approcahing this backwards as is the OP.
If she leaves, you end up paying her for her part of the house she co-owns with you, in exchange for keeping the asset in question (the house).
Now I understand that since you are upside down it makes for a messy scenario but the value of the house will go up eventually becoming a serious asset at some point over the next 10 years or so.
Going to try to answer some of the question asked in one post:
She is on the mortgage and deed.
Renting out the place isn’t an option, as rent would not cover the mortgage/hoe/etc. in this area.
I would be able to make the mortgage payment myself - it will be tough, but doable.
I have/can come up the cash to cover my share of loss sale, and probably even enough to pay the difference down to refinance.
On the above 2 points - I can do it financially, but I’d be getting the shaft big time, in that she’d walk away and I’d spend a ton of money now and in the future. Not at all fair.
This is interesting. Because 6 months ago, I would have said she is in no way a selfish person, and would never do any of this. My opinions are changing in the last 4 weeks. She is completely different person, it seems.
I do understand that. But, I’m then tied to this house for 10 years. A house I bought with her, to live in together with her. Now that there is no us, I’d like the option to move on with my life, maybe live somewhere else also - just like she is doing.
Basically, she gets to move on with her life, go where she wants, do what she wants, and becuase of her leaving me, and breaking a committnet (house and me) I have no freedom and have to stay here for years until I have an asset, or leave now and take a huge hit. No fair in my book.
Wow, I think the point is being missed completely. OP, with this approach you are being taken advantage of. Maybe if we use theoretical numbers it will become more clear.
OP and girl buy a house for $300,000. They borrow $270,000. The house could sell today for $230,000. Most people seem to be finding variations on a theme that says that she walk away and he is stuck taking on a liability of $40,000 (or whatever the real number is) for no reason other than she can’t afford it. What the house will be worth in the future is completely irrelevant. It is worth negative money today. If she feels it will be worth more in the future then let her take it over.
I can see a couple of choices. One, she borrows the money to buy out her half of the negative equity. So she pays you $20k and you figure it out from there. Two, if she can’t afford it then she pays you monthly to supplement the mortgage until she has paid her way out. Third, you talk to the bank and threaten to walk away if they don’t work with you on a short sale.
My sister was in exactly this situation and she took on the responsibility of the house and let her ex-spouse walk away. Financially it was an awful decision and left her holding the bag for no rational reason. I can’t stress enough that what this house may or may not be worth in the future is completely irrelevant.
She told me 2 weeks ago that she found an apartment and would be moving. I told her we needed to talk about the mortgage, money etc. She appeared shocked and annoyed, and told me would talk ‘next week’. I asked her again the other day to talk. And she told me she was meeting with a Realtor friend of hers to make sure she understands everything I’ve told her (mortgage, refinancing, upside down ,etc) and wanted to talk next week. And she told me “I’m not comfortable having a one on one conversation about this with you, because I don’t to agree to something that wouldn’t be fair to me”
The hurt. And pissed me off. I’ve done nothing but support and be good to her for 10 years, and told her over and over that I wanted to find a solution that would be best for both of us. The fact that she doesn’t trust me at this point is mind boggling, really. So, apparently we are to talk tomorrow/Monday (she’s not here for the weekend)
I agree. I’m not willing to bet on a future asset gain to offset my down payment and years worth of missing half her contribution. If you think about it, if half our payment was 1,000 per month, in only 5 years that is $60K extra out my pocket.
Yet, right now, if she borrowed the 20k from her mother and paid me, then I we’d be good. If she can’t or won’t but will agree to make payments for a time, I can go with that.
Right now, my thoughts of an offer to her are this:
We agree on a total figure that she owes (for example the 20k above), she pays me something like $500 per month minimum for 2 years or something, with the balance due at that point. I agree to refinance at that point. She does a quit claim on the deed now, before starting payments. That gives me cash flow, and known payout, and she has no right to any value gain. It gives her living money that isn’t a burden and gives her 2 years to figure out how to come up with the balance (loan, borrow, save, etc). Something like that, with timing, total, and payment to be negotiated. In the end I still technically lose financially most likely, but at least it gives me a life, and lets her get on with hers. Once again I sacrifice, but at least I don’t get totally screwed.
And I really hope her friend (I know him, I think he will be truthful with her and tell it like it is) will open her eyes where I couldn’t.
This an option. The down payment was all mine. So with that math, any sale would likely cost me nothing and leave it all on her.
But, as we are both on the mortgage, as others have said, the bank doesnt care who pays, as long as they are. I don’t want to be on the hook in that situation.
I hope we can come to an agreement. If we can’t, or she is being irrrational or unwilling, I will then get an attorney and protect myself completely.
The problem is, as much as I am heartbroken, I want us to both go on and be. I truly wish her well. But not at my expense any longer. If we can’t do this as mature adults, I know I am my own first priority and i’ll look out for myself legally.
One other thought, for some of the suggestions and what my thought process going in is:
Any fair solution should work out either way. Whatever she wants to offer, if I flip the tables and say, I’ll move out and pay you $X instead, should be just as appealing to her. If what she wants would hurt her if the roles were reversed, than it isn’t fair.
I know we have slightly different incomes/financial situation, but a commitment is a commitment no matter what. Especially when its her choice 100% to walk to away.
Another thought, if anyone knows the answer to this in a general legal sense:
If we sold with a loss could I legally take credit for my contribution to the down payment against that gap? What about capital improvements (siding, furnaces, roofing, etc that I paid for soley)?
For example:
Down payment 20K (my money)
Loss at sale 40K = 20K each owner share
My down payment covers my portion of the loss, she is on the hook for the entire 40K, so I just walk away with nothing lost, nothing gained?
If it comes near this situation I will get an attorney, but right now, just looking for peoples experiences.