Hey all, I'm in need some of advice. I'm not exactly the smartest when it comes to finances, but I'm slowly learning. I'm trying to decide if I should buy my ex-girlfriend out of the equity in our home or sell the home with her.
Some background knowledge about me that you'll most likely need to give any advice. I currently make $107,000 a year in salary. My current mortgage payment is $1,535 with $187 towards PMI on a 2,000 sq ft townhome. Cost of living for an apartment in my area is about $1,300 for a 600 sq ft studio apartment.
Two years ago my SO and I purchased a home together for $280,000 with a small downpayment on an FHA loan with a 3.25% interest rate (I think that rate is correct, if not it's ballpark). Fast forward to now; we are breaking up and I need to decide if I want to buy her out of her equity in the home. I called my current mortgage lender today to apply for a refinancing loan and was caught off guard with some facts. My home is evaluated for $320,000 - $330,000 right now, and my current loan amount is ~ $264,000. This could immediately open up some new options depending on whether or not my loan amount ($264k) is equal to 80% of the new appraisal price, because I'd possibly qualify for a better loan without PMI. Depending on the appraisal price I could have to fork some out of pocket cash towards my principal in order to achieve this. The lender told me that even if my home was appraised for $325k and I paid the $4,000 out of pocket to meet 20% total loan payment (325k * .80 = 260k -- 264k - 260k = 4,000) I'd be looking at a 4.25% interest rate and a mortgage payment of ~ $1650. I'm really at a loss as to how this even makes sense. I've looked at some figures online briefly, and with the numbers I've put in things are showing that a 30yr fixed with the same interest rates above would come out closer to $1,300 a month.
Now.. that's only one side to my story. The second is the buyout price. We have an agreement in place which states I'll owe her half of the appreciated value of the home. For estimation sake, lets say we'll use the same $325 appraisal value from the above example, so I'd owe her 325 - 280 = 45 / 2 = 22.5k on the home alone. She owe's me some money for bills that I've fronted over the last two years, and I also owe her half of the original down payment ($5k). There's also furniture and things in the home which I'd most likely end up keeping. Lets round that up to a 25 - 27k buyout price
So the tricky part is this.. I don't have that money saved up. I'll either have to take a separate loan out for the buyout price or include this buyout price within my new refinanced mortgage. With the real estate market looking the way it is and with the growth I've already seen on this home in the past 2 years, I really don't want to let this home go unless it's the intelligent thing to do.
Please give me some advice! Thanks!
edit: fixed some typos
edit2: added buffer to buyout price
Submitted April 03, 2018 at 10:57AM by helpmepleasefinance https://ift.tt/2q2yKop
