Need some Financial advice

[BabyBones]

I told my husband a few weeks ago that I wanted a divorce and since then he has been trying to find a way to keep our house (which is in both our names) He can't afford the mortgage (plus a Home Equity Loan) by himself so my brother in law suggested he refinance and build an apartment upstairs for the extra income. Now... my question is this, we owe approx. $200k between the mort. and HE loan, he was advised to refinance for $250k, take $10k to build the apt. and then I would get $25k. If we were to sell my house I could proably get $320k for it and then I would come away with allot more. He wants to keep the house because we have a dog and a little girl and he wants the security of still owning a home and not renting. Am I screwing myself by settling for $25k as opposed to what I could get if we sold it? If he does refinance in his name then I have no claim to the house anymore and then what if the value goes up and then he sells it??

I would prefer him to keep the house too because of our daughter and my dog ( I LOVE MY DOG and won't give him away and can't have pets where I am moving) . Any and all advice is helpful!!

[BellaDonna]

I think you should really talk to a lawyer ASAP. The value of the property needs to be assessed and then, if he wants to keep it, he will need to buy you out and refinance on his own.

[melrich]

Yes talk to a lawyer but my thought would be you owe $200k the house is worth $320k so you have atleast $60k each in equity. That is minimum what you should get as a buy out.

[FortunateOne]

Well, based on my experience flipping and building houses, the construction of the addition will far exceed $10,000. Just the engineering plans for the extra weight load on the house and current foundation alone will cost about $4,000 at the very least; plus, another $150 a square foot for the construction and required city permits. Take a small 600 square foot apartment and it will cost about a rough $90,000 to build. Don't forget the city's local zoning laws that may not permit 2 units on site. There's also the obsolete functionality issue of the extra square feet in a neighborhood full of smaller square foot properties. This will only lead to a lower resell price of other 2 unit properties in multi unit areas of your city.

 

Then there's the issue of value since in this market prices are going down for the next year to two. I've purchased property from divorced folks and the court usually gets about three appraisals: one from the husband, one from the wife, and one from the court appointed appraiser. After all three appraisals come in they will come up with a just transaction value. You see, it's not that easy to determine the true value of your home. Remember that to sell a house it will incur a sales commission and cost of about 10% the sales price of the current equity.

 

Now, for the most important question I have, why is he receiving full custody of the child? This will affect your future income as you pay child support to your soon to be ex. It will also affect the courts decision on a stable and structured home for the child. I think the best option is to "not" sell your half to your husband and ask the court to include both your names on title until your child turns 18 years old. By then the values would be much higher and your ex won't have to build an addition to earn more cash.

 

I'd argue that the monthly savings from your ex's purchase of a new home or rental will mitigate your equitable monthly contribution to the current mortgage, property taxes, and upkeep; in addition, I would tell the court that he'd be getting 100% of the income tax benefit home interest deduction which will further lower his yearly expenses on top of the child support. Then sell in a better market once the child becomes an adult.

[BabyBones]

My brother in law said that with th existing structure of our upstairs it would only cost $10k (he would be doing the actual work) so there is no labor cost

 

He will not have full custody of our daughter we will share equal custody of her and that is why he wants to keep the house (backyard, her room, security) I make more then he does and he got his hours cut recently and is making allot less then he was, add child support and rent for a decent two bedroom and it is very discouraging. I would prefer he keep the house but son't want to get "screwed". I put allot of blood, sweat and tears into that house too and feel I deserve my share of what it is worth. Again consider rental commision of at least $13k - $15k and I may come out the same as if he refinanced for less.

I will definitely consult a lawyer about this and see what happens. Thanks for the helpful advice.

[BellaDonna]

My brother in law said that with th existing structure of our upstairs it would only cost $10k (he would be doing the actual work) so there is no labor cost

 

 

Hmmmm....I think for now, you should keep your brother in law completely out of it. He may not have your best interest in mind.

 

Talk to a lawyer, for sure.

[FortunateOne]

Hmmmm....I think for now, you should keep your brother in law completely out of it. He may not have your best interest in mind.

 

Talk to a lawyer, for sure.

 

I concur too... since I know for a fact what it takes to build an addition and divorce decrees outcomes from cases I've handled. Talk to an attorney ASAP.

[melrich]

My brother in law said that with th existing structure of our upstairs it would only cost $10k

 

I agree with Bella and FO. I can't imagine how you could build an upstairs addition for $10k (even without labor costs). Also don't allow other family to be involved, it will all turn very nasty very quickly.

 

Consult a lawyer, ask him\her what is fair and then get him to put it in writing as a settlement offer to your husband. Make sure you quickly place a caveat on the house to ensure no decisions can be made without your interests being considered.

[BabyBones]

OK FO, I've thought about what you said and it does make more sense for me to keep the house, but can we still keep both our names on the title even if we are divorced?

I would still need to put an apartment on the house to help me with the expenses (neither one of us can afford the mortgage alone, that's why we wanted to sell) as far as the cost for that all I would really be doing is putting in a bathroom and a kitchen the structure itself would not me touched. The whole thing is I have no money to this. Unless we could refinance in both our names and take out a little extra so i could do the apartment. I just don't know if I want to deal with all these expenses, all the utility costs would still be what they are now, although I know it would be better for my daughter to be able to stay in her home....I'm so confused.....

[FortunateOne]

Yes, you can keep both names on title. The courts will include every term you both agree on the consent decree and will only rule on issues you can't agree on.

 

As for the addition, call your local city's planning or building department to find out if you can legally build first. Then if you can add an addition you need to ask what the whole plan approval process includes or not before you drop a dime, i.e. environmental analysis, transportation load requirements, land use, planning, engineering, flood control, school bond, tax reassessment, permit fees, utilities, property setbacks, licensed contractor requirements, architectural licensing, etc...

[BeStrongBeHappy]

Make sure your brother in law isn't going to put an 'off the books' addition on the house without county approvals and proper permits. If you attempt to sell the house, you could be in serious trouble if it violates code and/or you're seen as avoiding additional taxes that enlarging the house would bring the county.

 

Also, when getting divorced, people frequently don't think clearly and try to hang onto everything they want without looking at the reality that divorce requires lots of changes and accomodations in people's lives. You have this elaborate plan to try to let him hang onto the house, when it might make more economic sense to just sell the house and have him purchase a smaller one that he can afford on his own salary. You both may not like the idea, but that is a reality.

 

You have to keep in mind that adding an addition frequently costs a lot more than originally expected, and I frankly don't know anyone who could add an additional room/bathroom for only $10K, even if they do the labor themselves.

 

Plus he may be counting on a certain rental amount that won't happen, or he may have trouble getting a renter, or the renter may not pay, or the renter turn out to be someone who is a bad influence on your daughter etc.

 

the plan frankly doesn't sound economically feasible, but is just a desparate exercise in wishful thinking because he wants to try to hang onto the house. Better to accept the reality that divorce does involve big changes, and that you will need to adjust your lives accordingly.

 

Your daugther will do fine if you do fine, and staying in the house is a nice gesture but just not feasible if he can't really afford it. Remember that with divorce the goal is to disentangle your lives, not complicate them with these kind of schemes.

 

Don't agree to anything also without consulting a lawyer, as it is not in your best interest to settle for $20K if there is $60K equity in the house, unless you don't care about giving up that $40K.

[BabyBones]

Be Strong - Great advice you are absolutely right he is trying to hang on to whatever he can. At 48 he has only lived at home, in an apt for 13 years and now our house for 7

Since my original post allot has happened. My brother in law actually came over and looked at the upstairs more closely and realized the apt. he had in mind to build can't be done due to the structure of the house.(yeah thanks allot Big Mouth) We also had a realtor come in and appraise the house and let me tell you I was shocked at what they appraised it at and now there is no way I am NOT going to sell. I think my STBX also realizes this as well. Thanks to all who replied and I will keep you updated on progress.