Hi all,
My long-term partner and I recently split. I’m keeping the house and planning to buy them out of their half. The equity in the house is around $50,000, and I can comfortably afford the monthly payments and other bills. However, my mortgage advisor says I can’t qualify to take on the mortgage on my own due to the loan amount exceeding what I’m able to borrow.
I’m really worried about losing my home. Any advice on what I can do would be greatly appreciated!
As long as you keep making the payments, you won’t lose the house. If you absolutely need to remove your ex from the loan, your only options are an assumption or a refinance, both of which require you to qualify. Did they mention what your current debt-to-income (DTI) ratio is?
It sounds like either your income isn’t high enough to qualify for the mortgage alone or you don’t actually have $50,000 in accessible equity.
For a refinance, your total monthly payments (including mortgage, other loans, etc.) need to be less than 50% of your gross monthly income. Also, most lenders won’t allow you to cash out beyond 80% of the home’s value.
Do you have $50k in accessible equity, or is the home just worth $50k more than what you owe?
The main issue seems to be accessing the $50k to buy out your ex. You might want to look into secondary mortgage options that allow for a higher percentage of equity to be withdrawn. Can you provide more details on what you owe versus the home’s value?
If you’re struggling to qualify for a loan to buy your ex out, consider borrowing from a 401(k) if you have one. You don’t need to qualify to borrow your own money, and it might give you the cash you need.
If your ex is on the title, a refinance that pays off their share is not considered a cash-out refinance, so you may have more flexibility. Make sure your loan officer is aware of this. If they’re not on the title, you don’t need to pay them anything unless there’s a legal agreement in place.
You could look into a cash-out refinance and have your ex sign a quitclaim deed to remove themselves from the property. Most lenders allow up to 80% loan-to-value for a primary residence.
While you may be able to afford the payments, your income might not be enough to qualify for the loan alone. That seems to be the issue here.
Consider taking out a home equity loan instead of a cash-out refinance. This might allow you to access more of the equity while keeping your current mortgage terms.
Is the $50k the total equity, or is that what you owe your ex? If your debt-to-income or loan-to-value ratio is too high, you might explore borrowing from a retirement fund or using a personal loan to bridge the gap.
Do you have a family member who could co-sign or take on responsibility for the loan with you? That might help you qualify to remove your ex.
A HELOC (home equity line of credit) might be a simpler solution to pay off your ex’s share without refinancing your entire mortgage.
I’m in a similar situation. I plan to cash out some of my 401(k) to pay off debts and buy out my ex. While it’s not ideal tax-wise, keeping my home is worth it. Once I boost my credit score, I’ll assume the loan. I also plan to rent out a room to offset costs.
To buy out your ex, you can refinance, take out a HELOC, or a home equity loan. However, you’ll need to qualify for any of these options and stay within the lender’s terms (e.g., not exceeding 80% loan-to-value). If you don’t qualify, you might need to explore alternative arrangements.
If both of you are on the mortgage and note, you’ll need to refinance to remove your ex from the loan. If they’re not on the note, the lender won’t care as long as payments are being made, but removing them from the title might trigger issues. It’s a tricky situation, but refinancing is usually the cleanest solution.
If the equity is $50k, you only need $25k to buy out your ex’s half. That should make things simpler.
Talon said:
If the equity is $50k, you only need $25k to buy out your ex’s half. That should make things simpler.
Don’t forget they also need to assume the remaining mortgage, not just pay out the equity.
Talon said:
If the equity is $50k, you only need $25k to buy out your ex’s half. That should make things simpler.
You’d need $25k plus refinancing the rest of the mortgage to take their name off the loan.
@Tyler
Alternatively, they could use a HELOC and avoid refinancing entirely.
Talon said:
@Tyler
Alternatively, they could use a HELOC and avoid refinancing entirely.
If the ex wants off the loan, refinancing is necessary unless the house is sold.