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(Duplicate post in Real Estate)
I am a homeowner in the middle of divorce, and have been given the ok to refinance the home and split the equity as part of our settlement. I have been turned down by bank when asking to refinance loan due to appraisal saying my house is "unliveable", and bank insisting on repairs being done prior to refi.
Anyone know what I can do to obtain the bank funding needed to "purchase" my own house to change from our joint property status to my individual ownership without major updates to property? (Divorce includes 50/50 split in equity)
Thanks.
Most experienced divorce attorneys can guide you as to the correct path in such situations. In general the idea is that if there IS equity in the home and you do not want to sell that has to be split with your spouse. Lenders are familiar with such situations and generally these sorts of changes do not have the same kind of scrutiny as other kinds of cash-out refi, but given the mortgage mess I can fully understand why they'd want an appraisal.
Sounds like appraiser may disagree with you and believes there is no equity to split -- seems the lender is suggesting the poor condition of the house makes it worth less than you owe. I find this a bit odd, as typically lenders do not say "improve the house" (usually just saying "there is no equity to cash out) but maybe they are TRYING to work with you. I have not encountered such a cooperative lender, but who knows, they may be grateful that you just want a cash out and do not want to get a lower rate ...
I have never seen a appraisal that says a home is truly "with no value", nor have I ever seen an appraisal that says a home is "unlivable". Frankly I don't understand how a real estate appraiser would make such a statement. It'd be like taking a diamond ring for a jewelery appraisal and its just handed back to you with a statement like "this is too ugly to wear". Does not happen. Even if the diamond is damaged the appraisal report would still describe SOME value for the setting / recut stone... Similarly appraisal reports say things like "the current value of the home, accounting for condition, is $53,400." Sometimes the appraiser will list the "condition adjustments" -- $5000 for roof replacement, $3500 for exterior repaint, $2500 for interior repaint or something but the bank would be NUTS to think that by doing these items your home goes from "unlivable" to some amount more than you owe. You'd be sinking money you probably don't have into a house that might still be worth less than you have into it...
If there is no equity in the house or you owe more than it is worth then you MIGHT want to try to consider getting a modification to lower your payments, but that is a whole other problem that is covered in other threads... Also if there is no equity the divorce lawyer will probably tell you there is nothing to split. Maybe that's good news.
Thank you for your feedback.
In my attempt to be concise, I failed to state accurately... The house was appraised in current state at $193,000. However, the bank turned down my refinancing request until appropriate general maintenance was complete.
My hope is to get legalities complete with splitting equity of house in the "as is" status, then proceed as sole owner to fix up my house on my own time frame. I just don't know how to proceed.
Thank you for your feedback.
In my attempt to be concise, I failed to state accurately... The house was appraised in current state at $193,000. However, the bank turned down my refinancing request until appropriate general maintenance was complete.
My hope is to get legalities complete with splitting equity of house in the "as is" status, then proceed as sole owner to fix up my house on my own time frame. I just don't know how to proceed.
The problem is that it sounds like your property in it's current state will not qualify for a secondary market loan (Fannie/Freddie/FHA). This is the same problem we often run into with people trying to purchase a foreclosure. To qualify for this type of financing a house needs to be 'intact' and cannot be in a state of disrepair.
You could see if your bank will hold your loan "in house". Your rate will be higher and the term will probably be something on the lines of a 3 year balloon. Depending on the amount of work you need to do you might want to see if you can get a construction loan.
Once the house is 'back in shape' you could then refi to long term fixed rate financing.
(Duplicate post in Real Estate)
I am a homeowner in the middle of divorce, and have been given the ok to refinance the home and split the equity as part of our settlement. I have been turned down by bank when asking to refinance loan due to appraisal saying my house is "unliveable", and bank insisting on repairs being done prior to refi.
Anyone know what I can do to obtain the bank funding needed to "purchase" my own house to change from our joint property status to my individual ownership without major updates to property? (Divorce includes 50/50 split in equity)
Thanks.
I ran into similiar problems purchasing my current home. Previous owner on the property I bought added on a wing to the home that they never finished.
To move beyond this you must first ask yourself a question, is the bank correct?
If yes then some options are to ask the bank if they will escrow repairs?
If no, then will they do another appraisal? (we needed 4).
If they are not willing to get another appraisal then move onto another bank where they will do another appraisal and proceed.
Be sure to account for any repairs during your 50/50 split in equity..
Most experienced divorce attorneys can guide you as to the correct path in such situations. In general the idea is that if there IS equity in the home and you do not want to sell that has to be split with your spouse. Lenders are familiar with such situations and generally these sorts of changes do not have the same kind of scrutiny as other kinds of cash-out refi, but given the mortgage mess I can fully understand why they'd want an appraisal.
Sounds like appraiser may disagree with you and believes there is no equity to split -- seems the lender is suggesting the poor condition of the house makes it worth less than you owe. I find this a bit odd, as typically lenders do not say "improve the house" (usually just saying "there is no equity to cash out) but maybe they are TRYING to work with you. I have not encountered such a cooperative lender, but who knows, they may be grateful that you just want a cash out and do not want to get a lower rate ...
I have never seen a appraisal that says a home is truly "with no value", nor have I ever seen an appraisal that says a home is "unlivable". Frankly I don't understand how a real estate appraiser would make such a statement. It'd be like taking a diamond ring for a jewelery appraisal and its just handed back to you with a statement like "this is too ugly to wear". Does not happen. Even if the diamond is damaged the appraisal report would still describe SOME value for the setting / recut stone... Similarly appraisal reports say things like "the current value of the home, accounting for condition, is $53,400." Sometimes the appraiser will list the "condition adjustments" -- $5000 for roof replacement, $3500 for exterior repaint, $2500 for interior repaint or something but the bank would be NUTS to think that by doing these items your home goes from "unlivable" to some amount more than you owe. You'd be sinking money you probably don't have into a house that might still be worth less than you have into it...
If there is no equity in the house or you owe more than it is worth then you MIGHT want to try to consider getting a modification to lower your payments, but that is a whole other problem that is covered in other threads... Also if there is no equity the divorce lawyer will probably tell you there is nothing to split. Maybe that's good news.
The issue isn't so much equity; it's whether the person taking the loan can afford to make and keep the house liveable, since failure to do so will compromise the value of the bank's collateral.
If a person is buying a house that is run down and in poor condition, they generally have to prove they have enough money beyond the purchase price to make the necessary repairs. This is related to that requirement, it seems.
Thank you for your feedback.
In my attempt to be concise, I failed to state accurately... The house was appraised in current state at $193,000. However, the bank turned down my refinancing request until appropriate general maintenance was complete.
My hope is to get legalities complete with splitting equity of house in the "as is" status, then proceed as sole owner to fix up my house on my own time frame. I just don't know how to proceed.
No matter what you do you need to DM me so that you can file a UCC-1 lein on the property in "YOUR" name only for the value you have given to that property, down payment , monthly payments including interest and any money you have already spent on repairs so that if you were to windup loosing the home "you"
that you would be paid at the time of the sale by the lender. I just finished doing one .
if you have an FHA loan you can streamline and avoid the any upside down issues and teh appraisal alltogether. there, of course, are other guidelines. find a competent corresponding lender in your area to help you. some lenders are lazy and don't want to have to work for their money so you may need to talk to a couple before you find the right person.
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