My friend is ordered by the court to sell the home her and her ex boyfriend bought together. The mortgage is currently 3% fixed , they purchased it 8 years ago at 350k and it is estimated now at $550k in Pomona, LA county Ca. She has an 840 credit score, almost maxed out her 20k credit card limit, barely making the mortgage of $2k on her own for the past 2 years. She wanted to buy out her ex's portion of the mortgage but most likely won't qualify, has no savings.
Is there any creative financing to keep the house, if not what can she do to keep as much proceeds from the sale to hopefully use as a down payment for a home in a few years? Are there seller agents that would take 1-2% cut ? Thank you for your help
If she can get a loan to cover what she would have to pay her ex, then she'd also need to get roommates or something to help her with the mortgage payments. But honestly if she can barely make mortgage payments on a home they bought for $350K, will she be able to do payments on another $100K which is what she'd need to buy him about.
She should also get a lawyer because if she's the one who has been doing all of the payments on the home for the last 2 years, then she needs to make sure she gets some of that money back when they sell it (ie not 50:50 until she's taken her bit out for the last 2 years of mortgage payments and property taxes, etc).
Thats all dependent on what was ordered by the courts .
Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
1y
@Kyong A Yee is her ex-boyfriend willing to take some seller financing back for his portion? However, if she is barely making the mortgage payment, she should just probably sell. Yes you can find seller agents that would take a 1-2% cut.
@Joe Homs thank you for your quick response, he is not - she has a restraining order against him and they are not on good terms. I do appreciate your quick response, appreciate the insight!
If she can get a loan to cover what she would have to pay her ex, then she'd also need to get roommates or something to help her with the mortgage payments. But honestly if she can barely make mortgage payments on a home they bought for $350K, will she be able to do payments on another $100K which is what she'd need to buy him about.
She should also get a lawyer because if she's the one who has been doing all of the payments on the home for the last 2 years, then she needs to make sure she gets some of that money back when they sell it (ie not 50:50 until she's taken her bit out for the last 2 years of mortgage payments and property taxes, etc).
If she can get a loan to cover what she would have to pay her ex, then she'd also need to get roommates or something to help her with the mortgage payments. But honestly if she can barely make mortgage payments on a home they bought for $350K, will she be able to do payments on another $100K which is what she'd need to buy him about.
She should also get a lawyer because if she's the one who has been doing all of the payments on the home for the last 2 years, then she needs to make sure she gets some of that money back when they sell it (ie not 50:50 until she's taken her bit out for the last 2 years of mortgage payments and property taxes, etc).
Thats all dependent on what was ordered by the courts .
If she can get a loan to cover what she would have to pay her ex, then she'd also need to get roommates or something to help her with the mortgage payments. But honestly if she can barely make mortgage payments on a home they bought for $350K, will she be able to do payments on another $100K which is what she'd need to buy him about.
She should also get a lawyer because if she's the one who has been doing all of the payments on the home for the last 2 years, then she needs to make sure she gets some of that money back when they sell it (ie not 50:50 until she's taken her bit out for the last 2 years of mortgage payments and property taxes, etc).
Thats all dependent on what was ordered by the courts .
Yes but you have to ask for it and document things. Don't assume that the courts will ask.
@Theresa Harris thank you so much for responding with some possibilities and also for the reality of what that looks like, I think she was hopeful a traditional lender would give her a loan, at least now she can put her expectations into a sale and making sure it's not 50/50
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
1y
No amount of creative financing will allow her to keep the home. She can barely afford the payment now, so adding on another payment to cover the buyout portion isn't possible.
As mentioned, a roommate to pay for the buyout portion may be a possibility. However, without history of rent and her currently strained finances, she's not going to qualify with a traditional lender. She's going to need private financing (family, hard money lender, investor).
Perhaps she could find an investor to loan the ~$125K to the ex and take (very high) interest only payments for a few years while she gets her finances in order. Something like 10% interest (~$1050/month) for 3 years while she rents slightly above that and works on getting her finances in order to get a conventional loan showing rent history.
@Greg M. I'm going to share this last bit of "hail Mary " , I SO MUCH appreciate your advice & taking the time to respond. It's the reality needed for her to move on and as a friend , I won't put any more hopeful thoughts into her head. Thank you
My friend is ordered by the court to sell the home her and her ex boyfriend bought together. The mortgage is currently 3% fixed , they purchased it 8 years ago at 350k and it is estimated now at $550k in Pomona, LA county Ca. She has an 840 credit score, almost maxed out her 20k credit card limit, barely making the mortgage of $2k on her own for the past 2 years. She wanted to buy out her ex's portion of the mortgage but most likely won't qualify, has no savings.
Is there any creative financing to keep the house, if not what can she do to keep as much proceeds from the sale to hopefully use as a down payment for a home in a few years? Are there seller agents that would take 1-2% cut ? Thank you for your help
No savings and a maxed out credit card on a $2k payment - she cant afford any more debt to buy out the ex. She cant even afford the house as is. And that is assuming the court would allow the buyout given that this sounds to be adversarial.
List the property and sell, then put the proceeds into a HYSA to put toward a future home purchase. Also, this isnt the place to be penny wise and pound foolish. Find a quality, skilled realtor/agent and pay them the customary amount for your area. Saving 1% (about $5,500) in commission is likely to cost a ton more than that if you hire a cheap agent who underperforms and botches the sale. An extra 30 days on market because of poor marketing will likely cost all of the commissions savings.
@Patrick Roberts thank you for taking the time to respond. We were hoping there would be some work around saving her home but at least now we know to put our efforts into researching the next steps for the inevitable sale. Much thanks!
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
1y
@Kyong A Yee As mentioned above, it depends on what the court order says, but just selling it seems like it would be a great financial win for her if she's struggling financially now.
I see at least $200k equity, $100k each in gross proceeds (before taxes, closing costs etc). But if they bought at $350k , I assume with the downpayment, plus 8 years of payments, the currently loan balance should be a good amount less than $350k.
@Tom S. That is amazing! She was under the impression the proceeds would only be $70k and it would have to be split with her ex, this is what her realtor told her, let me make sure she heard him correctly. It was the same realtor they used to buy the house..
@Kyong A Yee Tough spot! Has she looked into a partner buyout loan or DSCR loan? Also worth consulting a local agent who might work for a reduced commission to help.