banker question....or for anyone smarter than me!

[ducatiz]

even simpler, it's the difference (positive or negative) between the value of the home and the current payoff of the mortgage.

yep.

even if you're paying down the loan, if the value of the house drops, you lose equity.

if the (market) value stays the same, equity can increase by paying down the loan. 

[OwnyTony]

even simpler, it's the difference (positive or negative) between the value of the home and the current payoff of the mortgage.

incorrect:

http://en.wikipedia.org/wiki/Ownership_equity#Real_Estate_equity

Individuals can also use market valuations to calculate equity in real estate. An owner refers to his or her equity in a property as the difference between the market price of a property and the liability attached to the property (mortgage or home equity loan).

http://en.wikipedia.org/wiki/Mortgage_loan#Equity_or_homeowner.27s_equity

The concept of equity in a property refers to the value of the property minus the outstanding debt, subject to the definition of the value of the property. Therefore, a borrower who owns a property whose estimated value is $400,000 but with outstanding mortgage loans of $300,000 is said to have homeowner's equity of $100,000.

I stand corrected.  I have always thought of it in the sense of how much i bought the house compared to how much of it i have payed off.

[OwnyTony]

yep.

even if you're paying down the loan, if the value of the house drops, you lose equity.

if the (market) value stays the same, equity can increase by paying down the loan. 

Of course, where i live, housing prices are less volatile/inflated/ and prices are more "sticky" (an economics term).  Sure, prices have suffered here but i would assume not nearly as bad as the houses out west. 

[vwboomer]

Ok so it sounds like I understand the equity thing a little. The equity is what it would sell for - current value of the loan. In that case we are looking at anywhere between 15-40k and will have a better idea once we get a couple real estate people in.

From all the posts, it doesn't really sound like that equity would be able to count as a down payment on a new loan.
One person had mentioned get a loan for 85, and pay her the 15. If I didn't put 15k down on the loan, it would be too pricey for me each month since I still have the 400 truck payment. However, I could get a loan against my 401k for the 5700 it would take to pay THAT off if need be.

She did say that I could effectively 'rent' the house. The current mortgage/pmi/taxes is about 660 which I could do. Something would definitely have to be drawn up so that from this point forward, she got no benefit from me paying the mortgage, even if it's only 100/month off the loan balance.

The market around here hasn't folded like in a lot of areas. It's still pretty fair. From what I've seen, probably down 5% maybe, but I'm no expert. Renting however, is expensive. For a townhouse, 2br I'd be looking at 650+. I refuse to live in a place without a garage, so that hinders the availability. + tack on the $35/mo or whatever I'd need to pay for a storage unit and it's theoretically over the cost of owning a house, even at an inflated interest rate. A friend would let me keep most of my tools in his garage, but I don't want my bikes sitting outside. The truck I could care less about.

Any more ideas or thoughts or tell me I'm wrong, I'm listening. Hopefully at the end of the week we can get together with her lawyer if he's interested and sort some things out. On a side note, I'm going to try to stipulate that whatever agreement we come up with, I don't want the asshole she's been seeing (and continues to see) to step foot in this house. sounds reasonable to me. Pretty sure that would push me over the edge to see him and then who knows what might seem like a good idea to me 

[ducatania]

Slight tangent, but why are you looking to sell now?

Home prices are the worst in history in some markets.  (Don't know where you are).  Unless you are paying some godawful mortgage rate or you have a balloon or adjustable that's about to wallop you, why sell?

If you don't have those situations and don't need a big house, how is the rental market in your area?  Could you rent the house out and move?  Rental rates are way up in many places (since mortgages are harder to get) and plenty of people are moving out and using their former home as rental income.

This works for many people because rents are usually much higher lately than home payments.  Moreover, if you are not reporting the income (I am not suggesting you do this) you can still claim the home as your residence and still get the tax deduction from the mortgage, while you rent elsewhere.

Be careful of that advice. If you live in a house and make say $30k in equity in it and sell it, you don't owe capital gains taxes on the gain. If you rent the house and sell, you do. If you rent the house, you'd have to move back in for two years to get the exemption back.

[hbliam]

Ok so it sounds like I understand the equity thing a little. The equity is what it would sell for - current value of the loan. In that case we are looking at anywhere between 15-40k and will have a better idea once we get a couple real estate people in.

From all the posts, it doesn't really sound like that equity would be able to count as a down payment on a new loan.
One person had mentioned get a loan for 85, and pay her the 15. If I didn't put 15k down on the loan, it would be too pricey for me each month since I still have the 400 truck payment. However, I could get a loan against my 401k for the 5700 it would take to pay THAT off if need be.

She did say that I could effectively 'rent' the house. The current mortgage/pmi/taxes is about 660 which I could do. Something would definitely have to be drawn up so that from this point forward, she got no benefit from me paying the mortgage, even if it's only 100/month off the loan balance.

The market around here hasn't folded like in a lot of areas. It's still pretty fair. From what I've seen, probably down 5% maybe, but I'm no expert. Renting however, is expensive. For a townhouse, 2br I'd be looking at 650+. I refuse to live in a place without a garage, so that hinders the availability. + tack on the $35/mo or whatever I'd need to pay for a storage unit and it's theoretically over the cost of owning a house, even at an inflated interest rate. A friend would let me keep most of my tools in his garage, but I don't want my bikes sitting outside. The truck I could care less about.

Any more ideas or thoughts or tell me I'm wrong, I'm listening. Hopefully at the end of the week we can get together with her lawyer if he's interested and sort some things out. On a side note, I'm going to try to stipulate that whatever agreement we come up with, I don't want the asshole she's been seeing (and continues to see) to step foot in this house. sounds reasonable to me. Pretty sure that would push me over the edge to see him and then who knows what might seem like a good idea to me 

First off, who owns the house and when was it purchased?

[ducatania]

One more thing, even if your area hasn't been hit hard like some others by the drop in real estate values, the market probably has at least gotten softer with houses taking longer to sell. This puts you in a better bargaining position with the realtor regarding their fees. I wouldn't be paying the standard 6% about now. Half that would be more in line.

[hbliam]

One more thing, even if your area hasn't been hit hard like some others by the drop in real estate values, the market probably has at least gotten softer with houses taking longer to sell. This puts you in a better bargaining position with the realtor regarding their fees. I wouldn't be paying the standard 6% about now. Half that would be more in line.

That's actually backwards. When the market was hot and homes sold in hours or days, you could negotiate the commission down as the realtor didn't have to do much more then list it on the MLS. Now that it's taking months for homes to sell, Realtors have to work for the sale and as such they want full pop.

[ducatiz]

Be careful of that advice. If you live in a house and make say $30k in equity in it and sell it, you don't owe capital gains taxes on the gain. If you rent the house and sell, you do. If you rent the house, you'd have to move back in for two years to get the exemption back.

yep.

that's why something like 60-70% of single-property landlords don't report the income.  and it's damn near impossible to track down by the IRS.

[ducatania]

That's actually backwards. When the market was hot and homes sold in hours or days, you could negotiate the commission down as the realtor didn't have to do much more then list it on the MLS. Now that it's taking months for homes to sell, Realtors have to work for the sale and as such they want full pop.

If I was selling and taking a loss on my house, no way I'm giving them full commission.  Houses aren't selling and they are hungry for a paycheck and will negotiate. A friend of mine just did that, his realtor took half. She told him that "a couple of months ago we never would even had this discussion, but nothing is selling now, so sure."

[ducatiz]

If I was selling and taking a loss on my house, no way I'm giving them full commission.  Houses aren't selling and they are hungry for a paycheck and will negotiate. A friend of mine just did that, his realtor took half. She told him that "a couple of months ago we never would even had this discussion, but nothing is selling now, so sure."

it's a bell-curve, guys.

when the market is hot hot, they will negotiate.  when it is stagnant, they will negotiate.  when it is "normal" they won't.

think about it.

[hbliam]

it's a bell-curve, guys.

when the market is hot hot, they will negotiate.  when it is stagnant, they will negotiate.  when it is "normal" they won't.

think about it.

That's a good point but not what we are seeing in my neck of the woods. I guess we don't have normal here or haven't for a long time. It was hot and now it's not. I'm still over 200K up and it stopped dropping so I'm good.

[vwboomer]

First off, who owns the house and when was it purchased?

Well, the loan and house are in her name. So there's that. It would have cost a few hundred to put my name on the deed and it didn't seem worth it. ha ha! hm. The loan is of course in her name as well since she bought it a couple years ago. I've lived here the whole time she has. Part of the reason we did the loan in her name at the time was my credit.

We're both going to meet with her lawyer next week thursday. I'll be interested what he has to say about the house being in her name. It might matter, it might not since we've only been married a year. If he tries to get her to take more than half of the profit from selling (and i dont think he will), I'll inform them that I will remove my drywall, wiring, windows and doors

[ducatiz]

We're both going to meet with her lawyer next week thursday.

um

you need your own lawyer.

now.

she could evict you as of today. 

all the things you list are not considered removable by law.  try to take them out and you might end up with a police record.

get a lawyer. NOW

[hbliam]

um

you need your own lawyer.

now.

she could evict you as of today. 

all the things you list are not considered removable by law.  try to take them out and you might end up with a police record.

get a lawyer. NOW

+1 Get your own lawyer.

It's just me but I'd move out now anyway. Sue her for anything you want.