Scared to add my name to husband's mortgage.

[cupcake]

I am a year and a half post-CH7 discharge, which included discharge of my mortgage. Since my discharge I have obtained a few CCs and I also have a couple CC accounts that had a zero balance at the time of filing that are still open. In total, I have around $3k credit available on those cards and they all have a zero balance. I have a five year-old car that is paid for and I have no debt whatsoever. I have a nicely funded savings account and am currently contributing 12.5% of my salary into my 401(k). My credit scores are in the upper 600s and low 700s. I’m sitting pretty good right now.

I got married last spring. Once we got married I took over the finances and got him straightened out. We paid off his CC, bought some new appliances, got him a better vehicle (paid cash for everything) and we are finally financially settled. When we got married, I moved in with my husband into his home and the property and mortgage are currently in his name. We are looking to possibly pay off the second and refinance the first because his rates are astronomical. The house lost approximately $30k in value over the last few years so the LTV (for the first and second) is probably close to 100%. If it goes through, our payment would be significantly lower and we’d cut ten years off the mortgage. And, he wants to add my name to the title and mortgage.

Here’s my dilemma:
If we are able to refinance, we would be using all of “our” savings to pay off the second. When I say “our” savings, I really mean “my” savings. All of the money in our savings account is money that I brought into the marriage. I’m scared. As I sit here today, I am as financially stable as I have ever been in my adult life (I am 38, btw). I got divorced back in 2008 and my CH7 discharge was in 2009; since that time, I have been able to really get my life back in order.

I am terrified to dump virtually all of “my” savings into “his” house (we will keep a small portion of the savings for an emergency fund). But, then again, I currently contribute equally toward the mortgage payment so what is the difference? And, since I am paying half of the mortgage payment, shouldn’t I want my name on the house and mortgage? This is just a *huge* step for me. It certainly makes financial sense to use the savings, earning less than 1%, to pay off the second, at an astonishing 9.75%, but I am afraid to commit myself to this house. I am afraid of getting back into debt. I know that mortgage debt is different than consumer debt but to me, it’s still DEBT!! And, there are some emotional roadblocks, as well. This is the house he lived in with his exwife and kids. The kids still live with us full time and I hate that they lived there a year as a family. She loved the house and is the one who had to have it. I sort of feel like I live in her house. But, selling the house is not really an option. We live in Michigan and real estate just isn’t moving at all. And, the kids love the house and would never want to move.


Advice? Opinions?

[BKParalegal]

Marriage counseling

[ValleYum]

I will give you my advice and just so you know where I am coming from: I have been married more than once - and I am about 10 years older than you.

I don't think you are emotionally ready to part with your money. The "his house" and "my money" say that - clearly. The fact that he lived there with his ex-wife as a family - that has to be hard. Really hard.

You may feel differently after a little more time... and a little more in your emergency fund. Or maybe you won't feel differently because you are fearful of debt and falling into old patterns and habits. Maybe you won't ever be able to get past the it's "her old house". That makes you human.

Make sure that if you deplete your emergency fund to pay off the second, that you spend a little $ on some short term disability insurance if you both don't already have it. I think it would be a really good peace of mind benefit and maybe remove one small worry from you.

Have you had a CMA (comparable market analysis) done on your house to make sure your LTV is still 100% with 2 mortgages? I was shocked when I saw mine - it was so much worse than I thought and I only had 1 mortgage.

It was worth every penny of the $50 I paid a local Realtor (for the CMA) and I honestly think the perspective you may could gain would make it worth every penny for you. The second may take a payoff settlement rather than the entire payoff amount making the house a financial bargain that *you* created.

Another thought - if you stay there in that house, you need to put your mark on the place, girl!! Paint - redecorate - knock down a wall!! If you have to own it then OWN IT!

Whatever your decision is, I wish you good luck and peace.

[cupcake]

Marriage counseling

I've already had this conversation with my husband and he appreciates and understands my concerns. I wasn't looking for, and don't need, marital advice.

[cupcake]

I will give you my advice and just so you know where I am coming from: I have been married more than once - and I am about 10 years older than you.

I don't think you are emotionally ready to part with your money. The "his house" and "my money" say that - clearly. The fact that he lived there with his ex-wife as a family - that has to be hard. Really hard.

You may feel differently after a little more time... and a little more in your emergency fund. Or maybe you won't feel differently because you are fearful of debt and falling into old patterns and habits. Maybe you won't ever be able to get past the it's "her old house". That makes you human.

Make sure that if you deplete your emergency fund to pay off the second, that you spend a little $ on some short term disability insurance if you both don't already have it. I think it would be a really good peace of mind benefit and maybe remove one small worry from you.

Have you had a CMA (comparable market analysis) done on your house to make sure your LTV is still 100% with 2 mortgages? I was shocked when I saw mine - it was so much worse than I thought and I only had 1 mortgage.

It was worth every penny of the $50 I paid a local Realtor (for the CMA) and I honestly think the perspective you may could gain would make it worth every penny for you. The second may take a payoff settlement rather than the entire payoff amount making the house a financial bargain that *you* created.

Another thought - if you stay there in that house, you need to put your mark on the place, girl!! Paint - redecorate - knock down a wall!! If you have to own it then OWN IT!

Whatever your decision is, I wish you good luck and peace.

The reason I put quotes around “his,” “my” and “our” is because I know that my money is our money, that his house is our house and so on. I guess I was just trying to show the ownership of assets and debt prior to and since we’ve been married. I definitely have issues with the exwife and her existence in the home and it being “her” home but that may not go away until the kids are over 18 and she has no reason to be there anymore. She’ll always be a part of their lives and thus, our lives, but she’ll have no need to be at our home.

Since my post yesterday, we have learned that our LTV is more than 100%. The house was appraised less than a year ago for $15k more than what it would be appraised for today. It looks like our best option will be to save for a few months to have enough to pay off the second completely. Then, we can decide if we want to refinance the first at that time.

Oh, and I started redecorating as soon as I moved in. I painted a couple rooms, replaced the window treatments, etc. I have a long list of things I want to do and I will do them slowly but surely.

[SunshineGal]

Hi cupcake,

You are probably at least a year or so away from being able to get a mortgage due to surrendering your house in the BK. Your husband doesn't need to refi to quit claim you on to title, so you can be on the deed without being on the mortgage. Search online for an amortization calculator and play around with the extra payments. You can probably pay off the 1st mortgage in the same amount of time without refinancing. Also, don't let the lower rates fool you, you're paying a higher principle payment each year on a 30 year loan so sometimes you're actually paying more in interest when you refi to a lower rate.

SG

[cupcake]

Hi cupcake,

You are probably at least a year or so away from being able to get a mortgage due to surrendering your house in the BK. Your husband doesn't need to refi to quit claim you on to title, so you can be on the deed without being on the mortgage. Search online for an amortization calculator and play around with the extra payments. You can probably pay off the 1st mortgage in the same amount of time without refinancing. Also, don't let the lower rates fool you, you're paying a higher principle payment each year on a 30 year loan so sometimes you're actually paying more in interest when you refi to a lower rate.

SG

The house wasn't actually surrendured in the BK. My exH, who also filed for CH7 individually, still lives in the home and continues to pay. So, there was no forclosure and, most likely, my exH will stay in the house until he decides to sell it someday. He has no plans to walk away from the mortgage and if ever finds himself in a position where he is considering it, he will let me know. So, it's my understanding that I could potentially qualify for a mortgage at the two year mark post discharge.

And, I am not sure we can do anything at this point anyway. The home value has dropped considerably more than we thought and we aren't sure it would even be worth refinancing, even if we can.

[SunshineGal]

Yep, you're right...two years. FYI, an automated underwriting will require 2 years from the first of the month following your discharge, so if you were discharged in 2-2011, you want to wait until 3-2013. Automated is far easier than a manual loan underwrite.

[cupcake]

Yep, you're right...two years. FYI, an automated underwriting will require 2 years from the first of the month following your discharge, so if you were discharged in 2-2011, you want to wait until 3-2013. Automated is far easier than a manual loan underwrite.

Great, thanks!! I didn't know that and that information is very informative and helpful!