I live in Kane County, Ill., and I’m divorced. My home is in my name, and I was able to refinance my first mortgage under HARP (Home Affordable Refinance Program). Now my second mortgage keeps me up at night. It has more than $80,000 due on it, and it matures next year. The divorce judge ordered my ex-husband to pay me $50,000 plus interest, but he is nowhere to be found and owes me more than $200,000.
I am current with my loans, but I don’t make much money. I just got remarried to a 100 percent disabled combat veteran. The property is now in his name and mine. He has bad credit but good income. My credit is great, but I make next to nothing. I can write a novel about my situation. Do you have any suggestions for me?
It seems like you can’t count on your ex-husband to pay you anything, so you have to figure out what to do without the huge amount of money he owes you. The first thing you need to determine is what your home is worth. You didn’t mention when you refinanced your home with HARP. HARP is the program the federal government promoted to assist home buyers to refinance their loans with their lenders after the Great Recession.
We believe very few borrowers actually received great deals under HARP or any deal at all. So, it’s great that you were able to refinance. One of the big issues during the Great Recession, and the aftermath, is that home values declined precipitously making it nearly impossible for homeowners to refinance their loans with their lenders. Now, several years after the Great Recession, home values in some areas have improved substantially. If your home value has appreciated, and its value is now significantly higher than what you owe your first and second lender, you may have some options available to you. Especially if your new husband has substantial income.
Before we get to your options, we’d like to point out that you should do some searching on the Internet to see what similar homes in your area have sold for in the last several months. You can also call some real estate brokers to give you an idea of what they think your home might sell for. What you’re trying to find out is if your home’s value exceeds the total amount you owe on your loans.
If your home’s value is greater than what you owe, you might be able to get a new home equity line of credit or another mortgage to refinance your existing second mortgage. You might even want to contact your existing lender to find out if you can extend the term of your second mortgage. You can also talk to a mortgage lender or mortgage broker about whether you could refinance both loans now and whether you would be better off by refinancing both loans.
Even though your husband has bad credit and you have good credit, you won’t know what your refi options will be until you talk to a mortgage broker or mortgage lender. But if you do talk to them, don’t have them “pull” your credit. Go over your options based on what you know, and perhaps get a copy of your own credit reports for free from www.AnnualCreditReport.com. You can also usually get a credit score from that site for around $10. Some credit card companies will give you your credit score for free, but it depends on the credit card type you have. You can check on your card company’s website.
Once you have your credit reports and scores, the mortgage person can look at the information and tell you whether refinancing will be impossible for you or what your options might be. As you know, the value of your home and your and your husband’s credit are all part of a puzzle that needs to be looked at to see what will work for you.
Your husband’s status as a veteran may allow you both to qualify for a VA loan. You have a number of options out there, and you need to get more information together to see what your options can be.
Glink is the creator of an 18-part webinar+ebook series called “The Intentional Investor: How to be wildly successful in real estate,” as well as the author of many books on real estate. She also hosts the “Real Estate Minute,” on her YouTube channel. Tamkin is aChicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.