Athen Apaquette

What do you do when you find yourself after a divorce houses rich but cash and income poor?

Stacy was were referred by her friend who had read my article on how to keep your house after a divorce. She and her husband had owned a home, and he had been the main breadwinner. After they separated three years ago, she had to start earning income again after 13 years out of the workforce.

Eventually she had built up her income as an independent contractor and was also receiving child support. But despite that, she still didn’t think she could buy her ex-husband out, and barely thought she could afford the mortgage.

As in many divorce decrees, she was facing having to take her husband’s name off the loan OR be forced to sell. She didn’t want to sell because her kids would have to change schools and lose touch with their friends, and because the price range she could afford was “in the boonies”. In addition to having to pay capital gains on the huge profit they would make, selling just was not an option.

She was as many divorced couples end up – house rich and cash and income poor. If she didn’t get financing she would be forced to sell, uproot her kids and herself.

Luckily, that was when she found me. We came up with a solution – we would refinance her under the bank statement program where you qualify for a loan based on the cash flow from the last 12 months AND find her an equity partner within her circle of friends that would lend her the money to pay out her ex.

They would then share in the profit when the house is sold and Stacy would no longer be partners in the house with her ex. The situation worked out for the best, especially considering that as in many divorce situations, the goal is to separate the finances from a husband who doesn’t communicate very well and uses the house and kids as blackmail.

This equity partnership is often called “equity share” agreements. In the end, I referred her to a lawyer who could help with the equity share agreement so that everything is now in writing and clear. It’s a WIN WIN.