How do I determine the buy-put for my ex-husband's share of our home?
Question Details:
THE MORGAGE OWED ON MY HOME IS $52,000, THE HOME IS VALUED AT $90,000. I AM MAKING PAYMENTS FOR THIS DEBT THAT WAS AQUIRED 3 YEARS BEFORE THE DIVORCE. THE COURT HAS STATED THAT WHEN MY YOUNGEST CHILD TURNS 18 (SHE IS 8 NOW) I HAVE TO SELL THE HOME AND GIVE MY EX HALF; OR BUY MY EX-HUSBAND OFF OF HIS SHARE FOR THE VALUE OF THE HOME. DO I STILL HAVE TO PAY MY EX FOR THE HOME? WOULDN'T I BE PAYING MY HOME TWICE, FIRST TO THE MORGAGE CO AND THEN TO MY EX?
no
Without seeing the actual decree and not knowing which state we are talking about, normal disclaimers and caveats apply regarding the accuracy of the following advice: Generally, when courts address the division of marital assets, specifically the marital home, they speak about a division of the equity. The equity equals the difference between the balance of the mortgage and the sale price of the home - less ordinary expenses - sales commissions etc. So in your example of a $52K Mortgage with a value of $90K The difference is roughly $40K, which should be divided, such that you may buy out your x-spouse for half of the equity or approximately $20K. Generally people do not have $20k on hand so this is usually done via a refinance of the property. Understand that you are sharing the risk/reward in this arrangement. If the property increases in value - the equity will rise - and if it declines, it will fall and your shares will change accordingly.
In one sense, you could see it as paying for half of your home twice. Of course, in another way, you could see it as getting to use half the house that you don't own, just for keeping the payments up, for 10 years. During those 10 years, your ex's money is tied up in your home, he can't get any use out of it, so it's only fair that he gets the "investment" income at the end of that time.
As of right now, the equity is $38,000 (value minus the mortgage), so his half of the house if you sold it now would be $19,000. If you can refinance to get the money, maybe he'll agree to take that much, now, and you'll have the place free and clear.
