Author Topic: How bad an idea is it to go halvies in a house with my ex-wife?  (Read 2941 times)

SaucyAussie

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My ex is trying to buy a house but is struggling to afford it.  I considered co-signing her mortgage but everyone says to NEVER, EVER do this.  So I came up with the idea of buying the house with her. 

I would come up with half the down payment and make half the monthly payment.  She would live in the house and maintain it - theoretically I could ask for some rent, but that is not what this is about.  The only upside for me is that I would own half a house at some point.  We are talking about a purchase price of around $200K.  So I would need around $20K for the downpayment and my monthly payment would be around $500.

I understand this sounds like a terrible idea, but here are the reasons I am considering it:
1. My kids live with her half the time and I want them to have stability.
2. When we bought our first house together, my ex provided the down payment of around $50K - she never got that back in the divorce so part of me feels a moral obligation to help her.  (at the time of the divorce the housing market was down, it has since gone back up).   
3. I can afford to do it.  I make around $150K/yr and my net worth has increased by around $100K/yr each of the last 4 years (post divorce).  Most of that is tied up in 401K and home equity.  (I can't just give her the 50K.)

Thoughts?

mozar

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #1 on: July 28, 2018, 11:27:46 AM »
Why can't you increase the child support?  Then she can save the extra child support each month until she has enough money for a down-payment. Buying a house for someone who can't afford is always a bad idea.

chasesfish

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #2 on: July 28, 2018, 11:30:54 AM »
I'm going to attack this at a different angle...

If I were in your position, I would be okay with the down payment, provided you file a 2nd lien mortgage on the house for the amount of the down payment.  Have it be at 3% interest with interest accruing annually but not paid.  If/when she sells it, you get your downpayment back plus all accrued interest at the rate of inflation.

As for the "payment" - never, ever.  If she can't afford that level of house payment, then you'll also have maintenance not being done, then your investment depreciates.   Come up with a bigger down payment if she needs the payment lower.  Get an unsecured line/note for $50,000 to $100,000, which you should be able to get with that income.

AccidentalMiser

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #3 on: July 28, 2018, 11:40:57 AM »
Why can't you increase the child support?  Then she can save the extra child support each month until she has enough money for a down-payment. Buying a house for someone who can't afford is always a bad idea.

I agree with this.  If you feel the support you are paying is inadequate and your children are suffering, just pay some more.

Like any business partnership, co-owning a home carries risks for both parties.  Given that you've had relationship problems in the past, you might reasonable expect relationship problems in the future if you do this.  You'll be tied together for decades.

I get that you want to help and you want everything to be "square".  There are better ways to achieve this than opening up a big old can of risk and pouring it all over your finances.

IF you aren't convinced by the opinions of us MMM luminaries and decide to go through with this anyway, at least consult a good lawyer and have some sort of contract drawn up to protect each of you to the extent possible. 

former player

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #4 on: July 28, 2018, 11:45:49 AM »
How about buying a whole house and your ex pays you rent?  Presumably this wouldn't be a paying proposition in the traditional sense, but you would be accepting a lower financial return in order for your kids to be appropriately housed.  Then if anything changed in the future (kids leave home, ex's new partner moves in) the tenancy can be ended and the house sold, either to the ex or on the open market.  You could agree at the time of purchase to the sale at a discount on market rates after a period of years if you wanted to account for the money lost on the marital home.

bugbaby

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #5 on: July 28, 2018, 11:47:24 AM »
No!

 Find the house you both agree on, pay the $20k or whatever toward down payment; and if you want to give more cash, just outright gift her whatever additional amount you like, NSA.

Do not make any implicit or explicit promise of additional support unless you're willing to sign a legally binding agreement of it.

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Cassie

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #6 on: July 28, 2018, 12:57:02 PM »

I agree with Joon.

Raymond Reddington

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #7 on: July 28, 2018, 01:32:26 PM »
No.
No.
No.
No.
No.
No.

NONONONONONONONONONONONONONONONO.

Noooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo.

Nope.

^This.

To the OP... Don't catch feels and allow an ex to wrap their tendrils into your financial situation. If you want to provide the best life for your kids, give them the absolute best life (without spoiling them) possible when they are with you.

You might be able to afford the initial costs, but the long term ramifications of getting financially involved with an ex opens you up to a lot of potential expenses you aren't considering right now. What happens if she dates someone who trashes the house and it requires expensive repairs? You are 50% owner, and any permanent impairment of property value affects you. What if she doesn't maintain the property and a little old lady trips on the sidewalk / walking across the property and you both get sued? What if she tries to rent it out and picks a horrible tenant who damages things, or you get involved because she's trying to get the tenant evicted and you need to be involved as co-owner? What if she takes out a home equity loan and tries to use your portion of the equity in the home to increase the size of the loan she receives? What if there ends up being a lien on the property, for any reason? Etc. Etc. etc. etc. etc.

50K is a lot of money, but not a huge amount in the grand scheme of things. If the divorce proceedings didn't result in her getting her down payment money back, then so be it. Legally, the proceeds from the house sale (I assume) were split 50/50 after paying off the bank, so what you received is legally yours and what she received is legally hers. That's the risk anyone (should) understand and take when buying a house with a spouse, is understanding and acknowledging the possibility for divorce. I love my wife with all my heart, and this is even something we talked about (and planned for) before we bought.

If you are worried about helping your kids, the best thing you can do is do you, while taking care of them. When they're adults, you'll definitely have the means to give them a nice head start in life, if you feel that is what you'd like to do...without sacrificing your FI or pushing your retirement date back too much.
« Last Edit: July 28, 2018, 01:38:59 PM by Raymond Reddington »

Hargrove

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #8 on: July 28, 2018, 02:00:49 PM »
Most of that is tied up in 401K and home equity.  (I can't just give her the 50K.)

Just noticed this part :)   

I would take a personal loan of $50k so that you can give it to her. You'll have a simple, nonemotional relationship with your own bank and can pay it off quickly.

+1 Joon!

Given that the loan will have a very short horizon if you prioritize it at your level of income, this is probably the easiest answer. It instantly solves two problems without creating eleventy hundred more for... absolutely no reason whatsoever. Do it as a home-equity loan for an even lower interest rate.
« Last Edit: July 28, 2018, 02:10:57 PM by Hargrove »

tomorrowsomewherenew

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #9 on: July 28, 2018, 02:53:45 PM »
I would not buy a house with her. But, there are plenty of other options--pay more child support, for example. Depending on whether you have a stable/decent relationship with the ex-wife, you could buy a duplex, and let her live on one side of it. Personally, as a kid I would HATE HATE HATE HATE bouncing from one house to another from week to week. If a parent lived down the street or next door, that would make things a lot easier. You could also buy a house and she could rent it from you for a low-ish amount.

Really, all of this depends on your relationship with your ex-wife. Lots of divorced couples get along perfectly fine (and act like adults), and others fight like toddlers for decades. Only you know how well you truly get along.

red_pill

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #10 on: July 28, 2018, 02:56:18 PM »

I understand this sounds like a terrible idea, but here are the reasons I am considering it:
1. My kids live with her half the time and I want them to have stability.
2. When we bought our first house together, my ex provided the down payment of around $50K - she never got that back in the divorce so part of me feels a moral obligation to help her.  (at the time of the divorce the housing market was down, it has since gone back up).   
3. I can afford to do it.  I make around $150K/yr and my net worth has increased by around $100K/yr each of the last 4 years (post divorce).  Most of that is tied up in 401K and home equity.  (I can't just give her the 50K.)

Thoughts?

I think you need to reconsider your reasons for doing it.

3. You can afford it.   While not being able to afford something is a good reason not to do something, being able to afford to do something isn't a reason to do something.  This shouldn't be a factor in pushing you towards doing it.

2. She ponied up cash for the first house and lost out, and you want to square it.  This is understandable, and you're likely a good, fair person.  But there have been some good suggestions on other ways to accomplish this with far less exposure.

1. "My kids live with her half the time and I want them to have stability."   This is the one that really requires scrutiny, in my opinion.  What is it about her current situation that is unstable currently? And what do you mean by "stability"?  Are you confusing stability with luxury? Could you explore this motivation a bit more and make sure you are seeing it logically?  Because it seems to me that if they live with you half the time, and your finances are secure, then they have security.  So what is it that you are hoping to achieve and is this the best way to go about it?

MrThatsDifferent

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #11 on: July 28, 2018, 03:15:57 PM »
I donít get this. You say she put up $50k for the first house but never got any of that back in the divorce, right? So, your half was $25k. Now, youíre thinking of giving her $20k so that you get part of her house that she pays the mortgage and youíre doing this for the kids? Weird. Seems to me, you owe her $25k and you can afford it, so gift her $25k and say, thanks for what you did for us when we needed it, this is for you, enjoy. And then wash your hands. Boom, done!

SaucyAussie

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #12 on: July 28, 2018, 09:28:01 PM »
Lots of good thoughts here, I appreciate it. 

Yeah, binding myself to this person again financially and legally would be a really dumb move, I definitely see better alternatives now.  I did pay her almost $100K in alimony so part of me wants to rationalize that as covering the money she brought into the marriage.

She has bounced around a few rentals but now has the opportunity to buy, with her mom giving her $50K for a down payment. I think getting her some extra funds for a bigger down payment is the way to go....

SavinMaven

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #13 on: July 29, 2018, 05:56:42 AM »
Quote
Yeah, binding myself to this person again financially and legally would be a really dumb move, I definitely see better alternatives now.

Are you ready to get remarried - to her? If not, then don't entangle yourself into co-ownership without the legal protections of marriage. A few hypotheticals for you...

- your ex loses her job. You're on the mortgage, and now you're responsible for the full amount. You good with that?
- you don't want to, or can't, pay both halves, so your credit score absolutely tanks. You good with that?
- meanwhile, she remarries, and you can't stand the guy. He's living rent-free in the house you're paying for. You good with that?
- your kids grow up quickly, as they do. You still have 20 years left to pay half her 30-year mortgage. You good with that?
- you remarry. Your new wife wants the house sold asap and your commitment of now-joint funds terminated. You good with that?

It's commendable that you want to help your kids. But either the place she sleeps right now is "enough" - truly adequate shelter - in which case your kids are fine, or, if it is truly inadequate as a shelter, that's for the courts to sort out in regard to impact on physical custody and visitation. I'm going to go out on a limb and say where they stay with her now is good 'enough' and I think you are FAR better off (as the person in this equation that seems better prepared, financially, for the future) to save, save, save for college, so you can launch your kids as debt-free as possible into the world. THAT would help them tremendously. A fancier place to rest their head at night? Seeing what happens when you don't handle money well is a very good motivator and could put them on the right path for life.

chasesfish

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #14 on: July 29, 2018, 02:35:13 PM »
Lots of good thoughts here, I appreciate it. 

Yeah, binding myself to this person again financially and legally would be a really dumb move, I definitely see better alternatives now.  I did pay her almost $100K in alimony so part of me wants to rationalize that as covering the money she brought into the marriage.

She has bounced around a few rentals but now has the opportunity to buy, with her mom giving her $50K for a down payment. I think getting her some extra funds for a bigger down payment is the way to go....

Extra funds = low cost 2nd lien mortgage with no payments, only accrued interest.   That's a hell of a protection for you, you get your money back if she sells and she can't rack up more debt on the house.

formerlydivorcedmom

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #15 on: July 30, 2018, 09:14:08 AM »
You sound like a good man. 

You can't - and shouldn't - rescue her.  If you cheated her in the divorce settlement, I can see you trying to assuage your guilt.  If you didn't cheat - if everything was aboveboard - then the settlement is "fair" and it's time to accept that and move on.

Wanting to do what's best for the kids is harder.  Are they being bounced from one school district, or school campus, to another repeatedly?  If that's the case, then you may need to go back to court for a modification stating that your residence is used to determine where they go to school.  That's a great way of providing stability without having to be up in your ex's financial business.

In our case, there's a huge discrepancy between the household income at my home and the household income at my stepdaughter's mother's home. HUGE.  Half the time SD lives with us in a McMansion with her own very spacious room...and half the time she shares a tiny room with her mom at her grandparent's quite small home.  She qualifies for free lunches and other governmental programs through her mom's income.* That led to some guilt when my husband and I married, and that took some time to go away.   He paid child support, and it was up to the mom how she allocated her money.

Our job - and yours -  was*/is to meet your legal financial obligations, provide a safe, secure, and stable home for your children when they are with you, and if necessary take legal steps to mitigate any chaos that the children experience at their other home.

*As of last week, we now have primary custody of SD, and we've made sure she is no longer on governmental programs (that always stuck in my craw, since we could afford to take care of her; the mom refused to allow it).  The change was made not because of her living or financial situation, but because of other issues that made living more with us be in her best interests. 

partgypsy

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #16 on: July 30, 2018, 09:28:08 AM »
I am recently divorced. My ex offered to keep paying part of mortgage and therefore have half share of house even though he moved out.  I said no. While it will be tight for me until house is paid off, I did NOT want a situation where, if my ex needed money, pressured me to sell the house to get his share back. And what if I decided never to sell my house? I would then be indebtedto him for half of whatever he felt the house appreciated to. What a terrible situation to be in! And a whole other bunch of reasons. For example the person living there would be the one doing repairs, upkeep, maintenance, so the true costs are not shared equally.

If you want to help, structure it by giving her a lump sum she can use to lower her payments or have a cushion (25, 50K). I'm sure with your job you have lower cost ways to borrow that money such as through a heloc or retirement fund loan. It would be a great help to her and the kids, and there wouldn't be this emotional/financial entanglement. Just make sure this makes sense in the sense, she can afford the house payments on her own, not with you providing ongoing financial support.
« Last Edit: July 30, 2018, 09:30:50 AM by partgypsy »

Finances_With_Purpose

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #17 on: July 31, 2018, 10:44:05 PM »
No.
No.
No.
No.
No.
No.

NONONONONONONONONONONONONONONONO.

Noooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo.

Nope.

More emphatic than I would be, but it gets to the point.

Tip: Before you do, cruise reddit/legaladvice for all the threads on co-owned houses...if that doesn't persuade you, I don't know what will. 

There are many, many alternatives to this.  Find one of them. 

Finances_With_Purpose

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #18 on: August 03, 2018, 11:58:30 AM »
More emphatic than I would be, but it gets to the point.

I've never been accused of being subtle.

Well, you're dead right, so no point in subtleties, I suppose.  If op's even remotely considering it, he would do well to go read all the horror stories from the many, many people who've done it.

SaucyAussie

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #19 on: August 04, 2018, 06:29:08 AM »
You guys crack me up.

So anyway, I decided to cheap out and just pay for the mover.  She was most appreciative so all is good.

At some point in the future I may be in a better position to make a more substantial gift.  Kind of an "oxygen mask" strategy.

Thanks all for the advice!

Hargrove

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #20 on: August 04, 2018, 11:50:41 AM »
Wait, you asked about going in on a house with your ex-wife for the sake of stability for your children and to a tune of possibly hundreds of thousands, and all she needed was help moving?

SaucyAussie

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Re: How bad an idea is it to go halvies in a house with my ex-wife?
« Reply #21 on: August 04, 2018, 01:24:15 PM »
Wait, you asked about going in on a house with your ex-wife for the sake of stability for your children and to a tune of possibly hundreds of thousands, and all she needed was help moving?

Yeah, she really surprised me!