Mortgage Refinance Question. - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

PegCityFlamesFan · 07-25-2012, 02:41 PM

Quick question if anyone is knowledgeable about this. I broke up with my common law girlfriend and I am trying to buy out her portion of the house. We've only been in it for a year but with the housing prices sky rocketing I know the equity went up. We bought for 230k and have about 227 left on it. I owe her 5k for the deposit. If they assess it at say 240 plus the 5k I am assuming I'll be paying her about 10k.

Long story short I was thinking about refinancing and adding the 10k to the mortgage but with the new 80% law how does this work. Any help is appreciated.

Table 5 · 07-25-2012, 02:47 PM

I'd ask here....some great insights.

http://forum.calgarypuck.com/showthr...47#post3805147

Rathji · 07-25-2012, 02:48 PM

Quote:

Originally Posted by PegCityFlamesFan

Quick question if anyone is knowledgeable about this. I broke up with my common law girlfriend and I am trying to buy out her portion of the house. We've only been in it for a year but with the housing prices sky rocketing I know the equity went up. We bought for 230k and have about 227 left on it. I owe her 5k for the deposit. If they assess it at say 240 plus the 5k I am assuming I'll be paying her about 10k.

Long story short I was thinking about refinancing and adding the 10k to the mortgage but with the new 80% law how does this work. Any help is appreciated.

Is this a post from 2007?

bizaro86 · 07-25-2012, 02:59 PM

You won't be able to refinance that without an appraisal way higher than what you paid, since you can only go to 80% on refinance. A very high appraisal wouldn't help you anyway, since you'd be paying the ex even more. Basically, you'll need to come up with the $ some other way than a regular mortgage.

Quote:

Originally Posted by Rathji

Is this a post from 2007?

Nah, he's in Winnipeg, house prices there are up 7.8% in the last year according to the Teranet survey. http://www.housepriceindex.ca/Default.aspx Not a boom, but something bought last year should be worth more.

bizaro86 · 07-25-2012, 03:13 PM

Quote:

Originally Posted by PegCityFlamesFan

Quick question if anyone is knowledgeable about this. I broke up with my common law girlfriend and I am trying to buy out her portion of the house. We've only been in it for a year but with the housing prices sky rocketing I know the equity went up. We bought for 230k and have about 227 left on it. I owe her 5k for the deposit. If they assess it at say 240 plus the 5k I am assuming I'll be paying her about 10k.

Long story short I was thinking about refinancing and adding the 10k to the mortgage but with the new 80% law how does this work. Any help is appreciated.

I think you might be double counting here. If the place is worth 240 and comes with a 227 mortgage, there is 13k of equity. Her half would be 6.5k and your half would be 6.5k, so you'd only buy her out for that amount.

If you're going to pay her back her half of the deposit, don't also pay her for the equity from that deposit. Unless of course you borrowed your half of the deposit from her or something.

Travis Munroe · 07-25-2012, 03:13 PM

Quote:

Originally Posted by Table 5

I'd ask here....some great insights.

http://forum.calgarypuck.com/showthr...47#post3805147

PegCity, i second using this forum as it not only features a CP sponsor mortgage specialist but many knowledgeable CP members on the topic.

albertGQ · 07-25-2012, 03:49 PM

CMHC will actually allow you to refinance up to 95% LTV (yes, that's right, I wrote 95%) in the event where a husband & wife have split up (marital breakdown) and one is refinancing to pay out the other to get him/her off title & the mortgage. Since you're common law, I am not 100% sure if you would be eligible. My opinion is that if the province of Manitoba considers you married, then you should be eligible.

albertGQ · 07-25-2012, 04:01 PM

Oh. I'll add that just because CMHC will do it, does not mean all lenders will. The one I currently work at will not due to the risk of refinancing up to 95%

blankall · 07-25-2012, 04:03 PM

Quote:

Originally Posted by Rathji

Is this a post from 2007?

No.....just Manitoba.

You bought the place for 230k and still have 227k in mortgage? Only 3 k has been paid towards the place?

Also, the place now is worth 240k? How long ago did you buy? Your girlfriend is getting a 100% ROI here despite the fact there woudl be hella transaction costs if you were you to sell right now. I would not pay her half the equity, without discounting for what some of the transaction costs would be. You are also assuming a huge risk here, what if the market crashes. You're assuming another 120k in risk, discount for that too.

bizaro86 · 07-25-2012, 04:08 PM

Quote:

Originally Posted by blankall

No.....just Manitoba.

You bought the place for 230k and still have 227k in mortgage? Only 3 k has been paid towards the place?

Also, the place now is worth 240k? How long ago did you buy? Your girlfriend is getting a 100% ROI here despite the fact there woudl be hella transaction costs if you were you to sell right now. I would not pay her half the equity, without discounting for what some of the transaction costs would be. You are also assuming a huge risk here, what if the market crashes. You're assuming another 120k in risk, discount for that too.

Probably paid 5% down, and rolled the CMHC fees into the mortgage.

Rutuu · 07-26-2012, 06:58 AM

Quote:

Originally Posted by bizaro86

Probably paid 5% down, and rolled the CMHC fees into the mortgage.

Nothing like owning something worth a quarter of a million, but can't come up with $10k cash.

Deegee · 07-26-2012, 07:25 AM

Quote:

Originally Posted by albertGQ

Oh. I'll add that just because CMHC will do it, does not mean all lenders will. The one I currently work at will not due to the risk of refinancing up to 95%

That kind of surprises me that even on a workout situation they wouldn't refinance is CMHC is willing to green light the deal. Seems like they would prefer to have delinquency fallout from a seperation.

albertGQ · 07-26-2012, 07:40 AM

The mortgage is not currently with us. The client can go to a B lender and see if he can get approved. We're not in the business to assist people in their personal affairs at all costs. We have shareholders and investors to look out for.

PegCityFlamesFan · 07-26-2012, 03:25 PM

Quote:

Originally Posted by Rutuu

Nothing like owning something worth a quarter of a million, but can't come up with $10k cash.

I'm proud of you for having 10k plus in the bank.

geos · 07-26-2012, 03:59 PM

Quote:

Originally Posted by PegCityFlamesFan

I'm proud of you for having 10k plus in the bank.

I guess he may be suggesting (though he could have done it more nicely I suppose) that it's probably not the strongest financial decision to commit to that kind of debt without having such a reserve handy. If you use up whatever equity you have in the property (remember the realtor is going to take a big chunk if you're forced to sell for financial reasons in the future), you're really hanging yourself out there in terms of financial risk.

Have you considered selling it together? She'd have to eat her share of the transaction costs if you did and you might end up better off. Sucks not to be owning something I know, but you should ask yourself what is truly realistic.

Just remember the financial institution isn't going to be thrilled in the first place. You're taking a name off the mortgage, taking away income (I assume) all while decreasing the equity in the property.

Have you also ensured that you qualify for the mortgage payments on your own without the second income?

Just some considerations... I don't mean to sound mean, just suggesting some things to think about!

speede5 · 08-02-2012, 12:52 PM

Her equity is half of whatever would be left after all the costs if you sold it today, no more. You will be paying realtor fees, mortagage penalties, and you'll lose all the money you paid CMHC. You guys are not in the position to be to gready with this one. Who's name is on the mortgage. If it's just one of you, the other should come up with a number, albeit very small, and buy the other out. If it's both of you, sell it and take your lumps. You'll pay more to keep it then you will walk away with.

I wouldn't be too broken up about walking away from the place, your not losing enough equity to make it worth all the stress. Starting over in this case isn't really that far a stretch and might be less stress in the long run.

Just my 2 cents.

Old Yeller · 08-02-2012, 02:01 PM

A good mortgage broker could help you through these issues and actually do a lot of the leg work for you.

troutman · 08-02-2012, 02:09 PM

Quote:

Originally Posted by Old Yeller

A good mortgage broker could help you through these issues and actually do a lot of the leg work for you.

That, and a family lawyer. I would recommend a formal separation agreement.

DownhillGoat · 08-02-2012, 02:32 PM

Quote:

Originally Posted by troutman

That, and a family lawyer. I would recommend a formal separation agreement.

Not to veer the conversation off topic, but how "solid" are separation agreements in Alberta? A friend and I were discussing them the other day, and she claimed they're not worth the paper they're printed on. However my lawyer assured me that it's final, and unless I didn't disclose something, it's iron clad. Anything I've been able I dig up on family law in Alberta seems to agree that with a separation agreement it's final (outside of the desk divorce).

troutman · 08-02-2012, 02:59 PM

Quote:

Originally Posted by kunkstyle

Not to veer the conversation off topic, but how "solid" are separation agreements in Alberta? A friend and I were discussing them the other day, and she claimed they're not worth the paper they're printed on. However my lawyer assured me that it's final, and unless I didn't disclose something, it's iron clad. Anything I've been able I dig up on family law in Alberta seems to agree that with a separation agreement it's final (outside of the desk divorce).

I would side with your lawyer, not the layperson.