BUYING REAL ESTATE AND DIVORCE
The idea of buying real estate is a common investment after getting married. I knew home ownership was a better financial investment than renting. After getting married, we planned to purchase our first home in a suburban area with a highly ranked school district. In 1999, interest rates were low and as a first-time home buyer, there were multiple programs available. I pre-qualified for financing with my credit score, income and 10% down. Before, financing with one credit history fully consider the long-term implications. The idea is dependent on how secure the other party is with making the decision. If the credit history of the other party is not favorable you may run the risk of no financing or a higher interest rate. Also, the other party needs to be secure with having no financial rights to the property. The decision to purchase based on my credit felt like a logical decision. A few years after purchasing the property, the mortgage company offered to refinance at a lower interest rate. One lesson learned is to work on credit issues before deciding to purchase real estate. Also, create a money reserve for financial emergencies such as loss of income, home repairs or any other unexpected expense is critical.
BUYING A SECOND PROPERTY
After gaining six years of equity, we made a decision to sell and buy a larger property. I will be the first to say this was the worst financial decision. In 2006, mortgage companies were a bit relaxed on qualifications for mortgages and a lot of buyers were encouraged to apply for adjustable rate mortgages. An adjustable rate mortgage is an open invitation to financial destruction. I say this especially if there is no financial reserve and if two incomes are not consistent. If I fast forward three years after purchasing a new property, I found myself unemployed and filing for divorce. After a year of unemployment, I moved out of the marital property. This was the beginning of a financial nightmare.
DIVORCE: REFINANCE, BUY OUT, OR SELL
Although it was a martial property there were a few options to recoup some equity or break even. The following options were explained by my attorney, 1) to refinance with only one mortgagor(removing the other party), 2)buy the other party out(not an option as I was unemployed), 3) sell the property(most logical). I learned after buying a property a resounding term, “you pay, you stay”. For option 1, I was not willing to remove my name off of a property in which I had a legal and financial right to, option 2 I was in no position to buy out the other party as I was unemployed and the other party was no position to buy me out either, option 3 was the most logical decision. Selling the property quickly became a nightmare. If a one party stays in the property and is unwilling to sell or cooperate with the sale it is doomed. After I left the marital property, only one mortgage payment was paid that meant the mortgage went into default. After numerous attempts at selling the property, multiple trips to court, the sale was sabotaged, property abandoned, and the bank foreclosed.
BEING PETTY or HANDLING BUSINESS
I have to point out there were exactly four years between mortgage default and foreclosure. This was more than enough time to sell the property to one of the multiple interested buyers. The fact remains that pettiness prevented the sale of the property. I went to court for a court order to force the sale of the property and vacate the property. Both court orders were in contempt of court. After the second court order to vacate the property was ignored, I stopped pursuing any additional court orders. I had to pay my attorney each time we went before the judge which meant more legal fees. In July 2013, the bank foreclosed and now my credit report has FORECLOSED PROPERTY in bold across my credit report for the next SEVEN YEARS. Pettiness is not productive and serves no PURPOSE.
LESSONS LEARNED
I would encourage any woman who is contemplating buying a jointly owned property to determine affordability based on one income. If this is a marital property, ensure there is a reserve in the event of loss of income or any other major expenses related to the property. From my perspective, FORECLOSURE should never be an OPTION. If possible buy REAL ESTATE with someone who gives a DAMN about their credit history. It takes years to repair bad credit!
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