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Any of you ever "downgraded" homes to save $? (Kind of O/T)

SteppingUp's picture

Submitted by SteppingUp on Thu, 05/19/2011 - 9:04am

We have recently been presented an offer we're finding difficult to refuse.

My FDH and BM bought a 3-bedroom 2 bath twin home/twindo/duplex (whatever you want to call it) and that is where FDH and I live now. BM's name is still on the house loan (she won't sign a quit claim bc it's helping her credit...that's a whole other topic). We've been updating things in the house with the intent to sell it in the next year or two.

FDH works with a lot of contractors through his job and one of them that he's gotten pretty friendly with is building a 16-plex apartment building. He wants someone to live in the 3-br 2-bath apartment in it and be the property manager. The property manager will also be in charge of showing/renting out storage facilities in the area. My FDH has actually been very interested in property management and this would be a great way to ease into it to see if he likes it (to eventually buy our own apartments to rent). The square footage of the apartment is actually very similar to our current house, we just wouldn't have our own yard and storage shed, but we'd have a garage.

When it all works out, basically rent will be FREE and we'd just pay our utilities. We could save tons of money doing this as we'd still both be able to keep our current jobs and save almost $1000 a month from what we're paying now for our house mortgage. We could do this for a few years and then build our own house (our dream).

The only issues is obviously it'd be downgrading from a house to an apartment, and we'd have to find a temporary home with a family or friend for our lab Sad

If we can't sell our house right away, we'd try to rent it out, or like I mentioned maybe BM would actually want to move back into the house and take it over, since her name is still on it that'd be an easy transition. Then we'd sign a quit claim and be out of it.

I'm 90% certain we're going to move forward with this but I'd love to get some opinions/advice.

Comments

briarmommy's picture

Submitted by briarmommy on Thu, 05/19/2011 - 9:11am

I think it sounds like a great idea. Don't think of it as downgrading think of it for saving for your future so that you will be able to do what you want with your money and get the home you really want.

PrincessFiona's picture

Submitted by PrincessFiona on Thu, 05/19/2011 - 9:19am

We are in the process of a similar decision right now. I think of it as taking stress out of our life. Our budget is stretched thin in the house we have. We don't need the strain it puts on our life. We are working toward a bigger goal - to retire early. So living in a smaller, less of a house is the price to reach that.

I have always believed...You can make any place you live home !

SusiQ's picture

Submitted by SusiQ on Thu, 05/19/2011 - 9:19am

It's an swesome idea but don't sign off on the quit claim deed - make her re-finance the debt into her name - The quit claim doesn't remove your FDH from the loan - it also removes an interest in the equity you two have been building up. If she wants, it fine - but she has to refinance it and pay you your equity.

Auteur's picture

Submitted by Auteur on Thu, 05/19/2011 - 9:25am

yes don't sign the quit claim deed. GG did that and he ended up with so much nothing you could COUNT it. Even though the lopsided in BM's fav "mediation agreement" said she is supposed to refinance.

NOPE! He went ahead and lost all that money. She sold it for a profit!! He got ZERO!

SteppingUp's picture

Submitted by SteppingUp on Thu, 05/19/2011 - 9:28am

Thanks for the advice. I guess I don't really understand all that stuff but we'll definitely get some professional advice before doing anything like that. I guess I dont understand how we'd lose out on money? So you're saying (if she even wants to do this) she should refinance under only her name...so what do we get out of that?

Auteur's picture

Submitted by Auteur on Thu, 05/19/2011 - 9:35am

you get the peace of mind that you're not on the mortgage should she default and foreclose! It's either that or force her to sell. . .which probably isn't a good idea in this economy; but if you can do it for a profit and split the proceeds or just break even.

SusiQ's picture

Submitted by SusiQ on Thu, 05/19/2011 - 9:52am

How long ago did FDH & her purchase the house? If you're not upside down on the mortgage then you have some equity. If you sign a quit claim deed, you give up any rights to that equity but it does not remove your FDH from the mortgage. So if she stops paying, they will come after your FDH for the mortgage.

Getting her to refinance - you might be able to get your equity out of it
But your best bet is to just sell it - pay off the mortgage and then your FDH & the ex would have to split the equity unless there was something in the divorce that stated who got what percentage of equity.

When my DH got divorced - he kept the house with an agreement that if he sold or lost it within 7 years from the date of the decree, he would have to split the equity with her. He quickly refinanced the loan and we still own the house - She got nothing that she was counting on getting.

SteppingUp's picture

Submitted by SteppingUp on Thu, 05/19/2011 - 12:21pm

Hmmm. They were never married so there is no agreement on the house. She just doesn't make payments on it.

So if he sells it, legally does he HAVE to split any profit with her?

They bought it a little over 3 years ago (just months before they split!).

Auteur's picture

Submitted by Auteur on Thu, 05/19/2011 - 9:23am

TOTALLY downgraded from my last lovely home to be "closer to the skids" (TM) who've all PASed out btw.

And this house is turning out to be much, MUCH more expensive and labour intensive than my last house!!

Can't help you there. But I'd love to move into a lovely apt all my own for much less money!!! Do you want to buy a house in upstate NY?? Lol

paul_in_utah's picture

Submitted by paul_in_utah on Thu, 05/19/2011 - 9:38am

We've had something similar recently come up, but for different reasons. I am deathly afraid of SD17 refusing to move out after graduation and "mooching" off of us forever. In order to avoid this, I have decided that we will sell our house shortly after her graduation, and sock away whatever we get. I travel a 8-9 months a year for work, and my DW will start travelling with me once SD is out of high school. Since we will not have a residence, there will be no place for her to "mooch." While we are "vagabonds," we will save as much money as possible, to be combined with whatever we get for the house. Somewhere down the road, when SD is older and less likely to "mooch," we will settle down and get a new house.