Home Equity

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Home Equity

Unread postby Broken Machine » Thu Oct 05, 2017 10:30 am

Ok. My divorce is starting to finalize. I have a question on home equity or who gets the home. State is OK. I bought the home a couple months before I got married. Deed and mortgage are in my name only. I'm sure I have to give the STBX her share of the equity even though she let the state of the house turn to < feces >, which is why she was all too happy to move out and leave me with it. So how do I go about figuring out home equity or whatever? I'm just trying to figure out how this gets figured out. I guess she gets her "share" of the value either gained or lost during the term of the marriage. Any advice on how to proceed? Or hell, any advice on what to DO?
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Re: Home Equity

Unread postby Trevor » Thu Oct 05, 2017 10:36 am

Just level-setting here. You lived there too, at the time? Or was she there alone, letting the house go to hell?

Have a few real estate people run recent sales data to get a market value of your home (some may trust zillow for this; I don't). Then subtract the outstanding mortgage balance plus expected realtor/legal fees for a hypothetical sale, then divide the resulting number by two. There's your estimate.

You'll do appraisals for the real numbers later.
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Re: Home Equity

Unread postby Broken Machine » Thu Oct 05, 2017 11:00 am

Yes I lived there too. I realize that I let it happen despite talking to her about it. I tried to clean up as well but she joined me maybe two times in the 11 year span of the marriage. She was the SAHM but all she did was sleep all day and stay up all night. Talked to her about that too but she did nothing about it. I was mentioning it for the irony of it all.

Well that sucks because I have been paying extra on the principle for years despite STBX not respecting finances. Not sure what options I will have to "buy her out" of the home or whatever the phrase is. How do people normally do this? I wonder if it is possible to just have in the decree that when I sell the house that I have to give the STBX half of any profits.

EDIT: Nevermind about what I said in the last sentence of the second paragraph. I just realized why that would be a bad idea.
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Re: Home Equity

Unread postby CentralORdad » Thu Oct 05, 2017 11:08 am

Its fairly simple.

Get a couple appraisals done. If she does not agree with the numbers, she can get some done too and they will average them usually.

Either sell the house and split the profit... or refinance and take out her half of the equity to pay her. Or if there are other assets/debts, you leverage those and see how the numbers fall. Since she is not on the deed or mortgage, if you have other assets to cover her half, you can do that as well.

How many kids and what ages do you have? What is your custody arrangement? You are going for minimum full 50/50 correct?

Where are the kids living now?
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Re: Home Equity

Unread postby TJinCA » Thu Oct 05, 2017 11:57 am

If you bought the house a couple of months before the marriage, then anything that you put in as a down payment should be your equity coming into the marriage and should be your separate property. Also any appreciation in value prior to the marriage but if it was only a couple of months that's probably not enough to argue about. So I think what you want to do is:

Current value minus current mortgage balance (and expected closing costs if selling or refinancing) = current equity

Current equity minus your down payment = community property equity

0.5 * community property equity = her share

Since the deed and mortgage are already in your name only, if you can offset her share of home equity with other assets (cash, stock, car, maybe even higher spousal support) you may be able to get away without refinancing. That could be a worthwhile tradeoff especially if you've currently got a good rate & payment. Otherwise, hopefully you have enough equity built up to do a cash-out refi and pay her off.

For current value, if you're going to have to refi you'll need an appraisal anyway and you can just use that. Otherwise you can get a couple of local real estate agents to run a competitive market analysis for you and tell you what they think it would sell for (let them know that you'd be looking for a price for a reasonably quick sale). I agree I wouldn't use Zillow, I think it usually runs high and that doesn't help you--for this purpose you're looking for the lowest plausible estimate of value.
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Re: Home Equity

Unread postby Bohica_2017 » Tue Nov 07, 2017 4:58 pm

TJinCA wrote:If you bought the house a couple of months before the marriage, then anything that you put in as a down payment should be your equity coming into the marriage and should be your separate property.


Being in your name only is an advantage here. I bought mine 1.5 yrs before marriage, w/ assets from my previous house.

But it was bought/mortgaged in both of our names. Despite premarital assets used (after 15 yrs) it was considered a "gift".

Brought it up...was a non-starter.

I'd try and estimate growth of that premarital money over time though. I was able to do that w/ premarital portion of 401k.
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Re: Home Equity

Unread postby grandet2 » Tue Nov 07, 2017 6:30 pm

gift my azz, oc will try to claim it as gift but it is your job to take it out of the net assets before calculating her share.

work on finding paperwork from purchase, that is the key,
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Re: Home Equity

Unread postby a dad » Tue Nov 07, 2017 7:15 pm

At minimum, the pre-marital original down payment should be in your column of assets.

The rest is determined by what you can prove. Remember, the majority of the first years of a mortgage go towards interest, not paying off the home.
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Re: Home Equity

Unread postby massdad1234 » Wed Nov 15, 2017 12:37 pm

get a fair market value done and divide by 2. Make sure if you have anything premarital, you do that math first and then whatever is left over, divide by 2.
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Re: Home Equity

Unread postby ScaredNConfused » Fri Nov 17, 2017 5:20 pm

TJinCA wrote:If you bought the house a couple of months before the marriage, then anything that you put in as a down payment should be your equity coming into the marriage and should be your separate property. Also any appreciation in value prior to the marriage but if it was only a couple of months that's probably not enough to argue about.


At least in Colorado there is precedent that this isn't the case. My ex put the down payment on our house almost a month to the day before we got married. The arbitrator awarded her 1/4 of the down payment as her sole portion and we split the rest of the equity equally. I'd have to find the language but it was about determining that the intention was for the home to become a joint asset and the majority of the down payment was called "a gift to the marriage" if I recall correctly.

In this case it worked out great for me since the ex got the house.
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