Buying out the ex
Today and tomorrow, I am writing about divorce and housing. Tuesdays are mortgage days; Wednesdays are tenant/landlord issues day. Write me if you have questions on those subjects.
At one of my doctor's offices, there is a smart lady.Not only can she handle insurance companies effectively (I think that's magic!) She handles her personal life with the same no-nonsense attitude. She asked me for advice as she was making these changes, but I think she had it well in hand without my input.
When she divorced, she stayed in the family home with her children by refinancing her mortgage. She borrowed against equity to cover what she owed her ex-husband for his stake in the family finances. Most of the time, I scream “NO!” at the words “borrow against equity,” but in this case, I think she did the right thing.
That was over a year ago. Her divorce was final. She got on economic and emotional track. She had a 20-year mortgage with a payment she can handle.
When the interest rates went down, she started to look into refinancing. Her recent 20-year mortgage had a pre-payment penalty. By working with the same lender, she got her pre-payment penalty waived. She is about to close on a 15-year mortgage that costs a little less per month than the 20-year one she took out when she first divorced.
If she had just finished paying off the mortgage on her house with her husband, she would have had it paid off in a few years. When she divorced, it could have forced the sale of the home. Instead, she refinanced against equity. Now, she is paying for another 15 years. What that bought her was stability for her children, freedom for herself, and a mortgage that she can afford. I still think she did the right thing. And she got lucky with interest rates.
When you divorced, did one of you keep the house? How did the economics of that work? In retrospect, do you wish you had done something different? (besides not marrying him/her in the first place.)
Tomorrow, I will be posting on renting after divorce.
