I’m Getting Something Many Divorced People Would Be So Happy With. I Don’t Want It!

Our advice columnists have heard it all over the years—so we’re diving into the Pay Dirt archives to share classic letters with our readers. Submit your own questions about money here. (It’s anonymous!) 

Dear Pay Dirt,

I am divorcing my ex. We jointly own a home and are both on the mortgage. I live there, and we split custody of a child. The house was appraised at more than what we paid, but less than what Zillow and Redfin value it.

My ex wants to refinance it into my name for the entire appraisal amount. We never had any money to put in other than basic repairs, and I always assumed if we did sell, it would likely be as a fixer-upper, and we’d get only enough to pay off the outstanding mortgage, as it has issues with leaks in the foundation and walls. We refinanced before he left, and the mortgage payment is now half of what a one-bedroom rental in our city would cost.

I hate owning a home, but see myself with two options: continue in a house, with a refinance that doubles my payment in order to give him his equity, or sell and rent a two-bedroom apartment for what will likely be an even larger monthly payment. I know a home is an “investment,” but I will have literally nothing to put into it if my payment doubles.

Am I supposed to use my portion of the refinance to make repairs, or do I pay down the mortgage and leave the house as is? If I get a chunk of whatever we sell it for, that money will run out eventually if I’m renting. The house feels like an albatross, but it also feels like I’d be shooting myself in the foot if I don’t stay. What am I missing here?

—P.S. I Have a Lawyer

Dear Lawyer-haver,

I don’t think you’re missing anything. Any choice you make will be something of a bet. If you make repairs, there’s no guarantee it’ll increase the value of the house by the time you sell it. If you pay down the mortgage and leave it as is, there’s no guarantee that you’ll be able to sell anytime soon; then you’re stuck in a house you don’t like that has problems. If you opt for renting, as you note, the money will eventually run out.

So you really need to weigh these things against your personal preferences. You say you “hate” homeownership, so being in the house for its own sake is not something that would make you happier than renting. Conversely, I don’t know what your income situation is, but if you’re feeling financially strapped, the idea of renting indefinitely might make you nervous—and so on.

It may be helpful to think about what the worst- and best-case scenario is for each of these decisions, because there’s no straightforward financial calculation you can make without speculating about what you’ll be able to sell the house for and when. You can make some educated guesses based on housing demand in your market and what the appraiser tells you, but there are other variables to consider too. Your feelings about homeownership should be a big consideration, because you can’t fully know how long you’ll end up in the house. Does your hatred of homeownership outweigh the potential gains you’d realize if you stayed?

I’d suggest you also consider the possibility of renting the house to a tenant, but if you dislike homeownership, I’m fairly certain you’d hate being a landlord even more. But, depending on the market, that route might allow you to pay down the mortgage faster while not staying in the house yourself. Unfortunately, there’s no right answer here. Personally, I’d go with the option I could live with the easiest, if the worst-case scenario were to happen.

—Elizabeth Spiers

From: I’m Stuck Owning A Home, And I Hate It So Much. (December 30th, 2021).

Dear Pay Dirt,

I am the someday inheritor of a family estate. The property is very dear to me and currently managed by my elderly father who I am close to. I am structuring my life to someday move back to the property, and would do so immediately if it weren’t for my siblings. They live on the estate (far away from my father’s house, but they’re around) and are actively using drugs. We have become estranged over the years due to their drug use and some fairly despicable illegal activity. They don’t seem interested in helping manage the property, nor do I think they would be capable of it. Basically, they’re trashing the place.

My father is slowing down and needs more help, so I’ve found myself in the position of working a full-time job so I can pay my mortgage where I live, as well as an unpaid part-time job essentially doing administrative work of managing the property, as well as some manual labor on the weekends. This can’t go on forever.

I’ve spoken to my father repeatedly in the past about how untenable the situation is, and he’s not willing to hear it. He’s also very isolated on the property and I think in fear of my siblings’ anger if they were confronted about their behavior. I’ve set some boundaries about being around them and talking about them with my dad, who seems convinced periodically that they’re “doing better” only to be disappointed again. Social services and law enforcement in my region are almost nonexistent, so I’m finding myself to be very alone, occasionally afraid for my and my father’s safety due to my siblings’ erratic behavior, and full of doubt as to what will happen when I have to be there full time, either to care for my dad or to run the property once he’s passed.

This is supposed to be my future, my inheritance, my dream, but as long as they’re around, it feels like an impossible nightmare. What should I do?

—My Siblings Feel Like the Enemy

Dear Feel Like the Enemy,

Unless your siblings are actively threatening you or your father, I don’t think you have any legal recourse here. Your father can decide to evict them from the property, but from what you’ve said, he has no desire to do that, and I think you have to accept that they’re going to be around.

If you haven’t talked to your father about his plans for the estate after he passes, you should do so. If you anticipate that you will be the one who has to manage it, then you should make sure your father’s will gives you the resources and authority to do that, lest you have further conflict with your siblings in the future. You should also know how your father plans to divide his estate between you and your siblings, so that you can plan for that.

If there are any ambiguities about these things, or conversations that need to be had with your siblings, it’s better to do that now, rather than wait until your father passes and isn’t around to clarify his preferences. It may also help to have a third party mediate this discussion, if you’re worried that your siblings are going to be hostile.

Ultimately, it’s really your father’s decision to allow them to stay or not. And his feelings toward them might not be as negative as yours. They are his children, after all.

—E.S.

From: My Mom’s Boyfriend Treats Me Like Hired Help. (March 11th, 2022).

Dear Pay Dirt,

My husband and I recently moved for work. We own our old house outright and have no desire to sell. We have student loan and credit card debt (which we’re paying down as fast as we can!), but good credit. Rent is expensive here, and we would like to buy a house in our new area, but have no down payment or savings. We plan to be here for five years before moving on.

Would it be crazy to re-mortgage our house to finance a down payment on a second home? And if it’s not crazy, should we at least wait to do so until after we’ve paid off our credit card debt? The payments on both mortgages would work out to be about the same as what we’re paying now in rent, which is a third of our monthly income. One the one hand, our rent money brings us no equity. But on the other, it feels irresponsible to take on more debt.

—What’s The Right Thing, Here?

Dear What’s The Right Thing,

I hate the idea of taking out debt to buy debt, in this case taking out a mortgage on a home you already own to buy another home. I know you said you had no intention to sell the first home, but I’m wondering, why? If you plan on moving back in five years, or if it has significant sentimental value, I’d keep it, but if not, I’d probably sell it, pay everything off and get a home in the new neighborhood you’ve been eyeing.

If you do not want to go that route, which does seem to be the case, then I would take out a big enough mortgage to pay off all your credit cards, student loan debt, and the down payment on the new home, and start fresh. This way, your finances will be a bit more organized. You’ll also be paying less in interest with your student loans and credit cards being paid off.

If you do not already, I would also have renters in the home you no longer live in. Being a landlord can be a headache, but having someone pay rent on the property could help pay down the re-mortgage faster, and give you a bit more wiggle room.

—Athena Valentine

From: I Have A Real Estate Scheme Everyone Says Is Totally Irresponsible. I Think It’s Genius.(April 12th, 2022).

More Money Advice From Slate

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