Upside down on a house I HAVE to do something about!

[floss&ferd]

We bought our house 10 years ago.  (Before house hell started).   We had no trouble getting a mortgage, it was well within our means, etc.

I filed for divorce last month and was planning on refinancing and keeping the house and found out today that it appraises too low---$10,000 to low!  

I have several options:

1.  Come up with 10,000 in cash.  (which would have to be some sort of loan with interest)

2.  Try to sell the house--which requires a couple thousand in some much needed home repairs like carpet/bathroom floor/paint before I could put it on the market.

3.  Short sale to bank--and take the credit hit.

4.  Walk away and take the foreclosure.

It also BADLY needs a new roof which is another $10,000.

It's SO frustrating.  I can afford the house.  I have a good credit score.  I had no problems getting pre-approvedwh for the amount I need to refinance.  The monthly house payment would be LESS than what I'm paying now and less than rent.

My dh doesn't want the divorce.  Won't willingly move out.  And won't help with house repairs.  (1/2 the repairs are home projects he started and never finished and I'm going to have to hire somehow to do them.)

I don't really like the town we live in but was going to keep the house because it would make the transition easier on the kids.  (And it's cheap.)

Guess I'm just curious about other people's opinions.

(

[GirlBoyGirl]

So you ARE getting divorced though, right? And you just wanted to refi to get it in your own name or what, I am not sure why you need to refi if you can afford it, unless it is to get your ex off? If so, can't he just sign a quit-claim deed?

If you can afford the house then I don't recommend walking away or short selling.

[Ruthiegirl]

Ask for a second appraisal.  We had our house appraised last year and one quote came in at 160K and the other at 220K.  Obviously, a huge difference  The second appraisal made a huge difference -- we were able to refinance to a much lower interest rate and eliminate PMI which saves us a lot of cash.  

I would ask around. Ask friends and neighbors and anyone in the real estate business who knows a more flexible appraiser.  Appraisers are individuals and they each have a different philosophy and approach.  

[CarrieMF]

If you don't like the town why stay there?  The kids will transition no matter what happens.  If DH wants to stay in the house consider signing your half of the house over to him for equal value in assets & $ during the divorce.  Then it doesn't ruin your credit.

[floss&ferd]

Even with a quick deed, I still have to have a new mortgage without his name on it.

DH will not agree to stay in the house--and if he did he would have the same appraisal issues.

My brother is my mortgage broker.  He's trying every trick and calling all his friends with no luck.  It's a very small town with LOTS of repos which lowers the appraisal.  

My house payment would have been $575/month.  4 bedrooms/1bath.  Rent in the nearest larger town is going to be about 850 or more for a 3 bedroom apartment. 

[crunchy_mommy]

Ughhh I feel you, our house is worth $100K less (and it was already just about the cheapest house we could buy around here)!!!!! We feel so 'stuck' here!!!!

In your situation, I would lean toward trying to come up with the $10K... if you have good credit and stable finances, that shouldn't be too hard, and $10K really isn't that much (though I suppose that depends on your area/COL -- high COL here!) Actually I'd be tempted to borrow $15-20K so you have some money leftover to make those needed repairs. But obviously this depends on your budget and the interest rates & I only even make the suggestion because you say you are in a good financial position.

[CarrieMF]

Then for $10,000 I'd get a loan.

If DH doesn't want to willingly move out then when he goes to work change the locks & put his stuff outside.

[PenelopeJune]

Do not short sale or foreclose if you can at all help it. Been there, done that (except for the 'being able to help it' part. :P ) and it sucks all the way around.

I agree, if you have to, get the $10,000 loan, as long as it's still affordable for you.

[A&A]

Originally Posted by CarrieMF 

Then for $10,000 I'd get a loan.

If DH doesn't want to willingly move out then when he goes to work change the locks & put his stuff outside.

I'd probably get the loan, too.  I wouldn't lock dh out, though.  You'll probably both have to stay in the house until a judge decides who gets it. 

[zebra15]

Well what good is owning a house that you dont like and dont like the town its located in?  Honestly?  You should be able to 'split the difference' in the divorce with each of you taking a 5k hit.  So start looking for a relator, list the darn thing and see what happens.  Short sale, foreclosure (on both your creditscores) or somehow you each come up with money at the sale to bring it even.

Time for the EX to be a big boy and deal with reality here.

[lilyka]

Holy crap. I was in this exact position just last year.  right down to the $10,000 less than I needed.  And your right.  a quit claim will do nothing.

What kind of loan do you have?  Any chance it is a FHA loan?  

If so you are in luck.  You can do a stream line refinance through FHA.  The loan itself requires no appraisals.  Some banks however do.  It is important to find a bank familiar with these and who will do it without the appraisal (be sure their secondary lender does not require an appraisal either).  I live in a large city and only one place would do it and she had never actually done one before.  I went through Home Federal.  The down side was I had to come up with $3000 in closing costs.  Cash.  No loans, no credit card.  I ended up putting everything on my credit card for 6 months and stashing my cash for closing.

If it is not an FHA loan your options for a refinance are limited.  Ok your options are nothing.  Absolutely nothing but to wait it out.  My ex threatened to take me back to court. (I had a deadline)  My lawyer said let him.  It was such an easy case he would even do it for free.  I was not in contempt.  I was trying.  I could not refinance.  Period.  Even though I was approved for the loan they wouldn't do it because the appraisal was low.  And they charge for appraisals now.  $700!!!  I wasn't going to risk getting another bad one. I put it on the market but only one person looked and they wanted me to take $40,000 off AND do a lot of repairs.  ummmm, no.   When my ex whined i  decided to just let it foreclose since it was that important to him to have his name off.  Of course his name was still on it....until after foreclosure.  He had way more to lose with bad credit than I did.  He suddenly found his patience restored.  There was really nothing he could do about me being unable to refinance other than make a large lump sum payment to up the equity and lower the amount I needed to refinance. So we waited.  It is all we could do.  

Would fixing the roof bump up the value of your house enough?  How long can you wait?  

[lilyka]

Will taking a loan out help?  I know it would not have helped me.  I could not have any loans related to the refinance.  Even a personal loan that I was using to close the gap or cover closing costs.  

[floss&ferd]

It's a VA loan.  But the VA part goes with husband.  I think I could get a loan, but don't really want to go that route.  (Because if I take out a loan for 10 grand and then up with 10 grand in attorney fees, that will be too much.)

I meet with my attorney on Wednesday.

Lilyka--so did your husband moved out before the refinance???  Mine is refusing to budge an inch towards the door.  Or help with some needed home repairs to list the house.  If I could wait a year I could hopefully save the 10,000--or close to the amount.  I really need to get stbxh OUT of the house.  And that's getting ugly.  (and i'm worried about that expense too.)

I guess for now I'm going to focus on getting him out of the house and keeping custody of my kids.  

(My stbxh is suprisingly focused on the financial parts as well.  As in, how much is this going to cost me?)

[zebra15]

Would you be willing to cut your losses from the house, pick up the kids and move to a rental?  That option sounds the least stressful and gets you away from STBX and lets him deal with house issue.  The kids will adjust, probably very quickly.  While rent may go up, utilites will probably be cheaper and honestly not dealing with STBX daily has to be worth something   right?

[lilyka]

yes.  When I filed for divorce I automatically got temp custody and possession of the house.  And he had to keep paying all the bills. He moved out a few days after I filed (he had already bought another house.  I am pretty sure he was planning on moving his mistress into it)  Not sure how I ended up with everything....  Then six months later when the divorce was finalized I had gotten the house officially but had to refinance in 18 months.  I don't know why they thought this was a possibility.  I was working part time at starbucks....who was going to give me 100k dollars LOL  Then a few days later the housing market crashed and a few weeks later the neighborhood slumlord was foreclosed on.  4 homes similar to mine (I have a duplex) each sold for between 30k and 75k.  My comps were completely screwed.  Doesn't matter that those houses should have been condemned. 

Have you filed anything yet (separation? divorce?).  if not I don't know how to get him out.  

[floss&ferd]

I filed for divorce in the end of May.  We had a preliminary agreement drawn up by my attorney (because he refuses to hire one) that gives me possession of the house.  He was suppose to be out 45 days after being off the mortgage.

I knew I'd be approved for the mortgage.  But I didn't think the appraisal would be that low!  I meet with my attorney Wednesday to file something to get him out of here and give me more time.

I was really trying to get along like adults, etc.  But he is making it REALLY difficult.  

I was really freaking out about the house issue and then I remember his ex-wife had FIVE years to refinance their house!  So yeah, he can give me a year.

[Savoir Faire]

If this were my situation, I'd let him have the house before I start down my new life with a foreclosure/short sale/debt on my shoulder.

[heatherdeg]

I'm not sure how VA loans work, but I think they're like FNMA where VA insures them, but they're held by a bank...?  If so (and the rest of this advice is assuming so because I'm almost certain that's the case), approach that bank about financing the house for the outstanding balance.  I know that sounds crazy, but explain the situation to them.  The reality is that if they don't finance you (someone who is clearly qualified to take on the payment) then they're at risk of short sale or foreclosure--which they stand to lose money on vs. lending to you at $10k over appraisal and rolling the dice that you won't be in a foreclosure situation anyway before the house increases in value enough to cover the extra.

At this point, you have nothing to lose by doing that; and you have the best odds with whomever is holding the current mortgage.  If the terms of that loan stink, just make sure there is no prepay penalty and wait until an appraisal would come back a little higher to refinance elsewhere if need be (assuming the closing costs are worth doing it).

Dissolving the assets of a marriage is a qualifier for short sale.  If the current mortgage-holder hears this, they're way likely to play ball.  No bank wants a short sale on their hands.

And I'm sure your brother will understand.  Hopefully he won't discourage you from doing this.  You have nothing to lose by approaching the current mortgage-holder--no matter who it is, or what ANYone says they will or won't do; and if the first person you speak to there says "Sorry", escalate it up.

[floss&ferd]

That's exactly how the VA loan works.  It kinda functions like a downpayment but my mortgage is currently with Citimortgage.

Not only does my brother understand, but he would help.

I meet with my attorney Wednesday so I am going to see what he says.  My goal is to get him out of the house.  (Or get me out of the house.  I really don't care either way.  Just don't want to cohabitate any longer.)

[worthy]

Originally Posted by floss&ferd 

It's a VA loan.  But the VA part goes with husband.  I think I could get a loan, but don't really want to go that route.  (Because if I take out a loan for 10 grand and then up with 10 grand in attorney fees, that will be too much.)

I meet with my attorney on Wednesday.

Lilyka--so did your husband moved out before the refinance???  Mine is refusing to budge an inch towards the door.  Or help with some needed home repairs to list the house.  If I could wait a year I could hopefully save the 10,000--or close to the amount.  I really need to get stbxh OUT of the house.  And that's getting ugly.  (and i'm worried about that expense too.)

I guess for now I'm going to focus on getting him out of the house and keeping custody of my kids.  

(My stbxh is suprisingly focused on the financial parts as well.  As in, how much is this going to cost me?)

Have not read the rest of the thread yet, but I was advised to file a motion requesting "temporary sole possession of the house" which would mean he has to leave or its legally enforcable.  It was easy to file and didn't cost extra.  FWIW.  I didn't have trouble getting my ex to move out, but I filed this with the divorce papers just in case I might have had trouble.