It always amazes me to hear people I know say that buying a home is no big deal.
I mean, granted, they’re not my friends per se.. but some people are under the misconception that owning a home is “no big deal”.
It’s just a home. And they can sell it later if they decide they don’t want it any longer or if they split, right?
Wrong.
Many things go wrong with a home, such as this situation of a friend we know, who took the entire mortgage under his name, including paying for the downpayment.
(This is another friend. Not the Idiot from before.)
Her excuse?
Her student loans and her credit card debt would show a poor credit score next to his shining 800, and the cost of the mortgage would be more expensive as they wouldn’t get a better rate.
Hmm…
The kicker, is that the guy bought that story without checking it out to see if it were true with the mortgage broker, and after he signed that, she pressured him to put her name on the deed for half.
She also quit her job after they bought the home, and he fully supported her in her entrepreneurial business, giving her money, paying for everything .. but everything she earned, went only into her pocket.
See, her money was her money, but his money was theirs.
How fair is that BS?
The home was also convenient for her job, but a 4 hour daily commute for him by train. He couldn’t even drive to work, he had to take the train in for 2 hours to get down town, and come back in another 2 hours.
HMMMM…. Seems unbalanced eh?
He wasn’t married to her which means any property in his name as a common-law spouse would not be contested by the court to give her half.
Update: Vinny makes a clarification that if he bought and owned the property BEFORE they were together, he would not have to give her half, but if they lived in it together after being together, she gets half, regardless of the name on the deed.
He never imagined that she’d leave him because he did EVERYTHING for her. Gave her all of his money, paid for EVERYTHING even though she worked, and even spent his nights and weekends upgrading and doing work on this rickety shack to make it a better place for their family.
But leave him she did.. 7 years and 2 kids later.
She took full custody of the children, sending them to the father only on the weekends (her job is an odd job, and she only works on Friday nights and on weekends, as her clients are busy during the week).
Hmmm… How convenient.
The pain doesn’t stop there!!!
Then she ended up buying a SECOND HOME for herself, conditional on the fact that he would give her 50% of the value of the home that he essentially paid for, IN CASH, as a down payment on the new home.
In the end, we figured the poor schlep ended up paying 4x what he should have paid, and he bought a home and a half.
How so? Let me explain.
They bought a house for $200,000.
He took the entire mortgage under his name, and she didn’t pay a penny towards it — in down payment or in mortgage payments, even though she promised. Remember, she also quit her job, so she didn’t have any income for the first little while either, and was a bit of a shopaholic.
He also fronted the $40,000 down payment on the home (his ENTIRE life savings from working hard at kind of crappy jobs at corporations, never asking or getting a raise).
So the mortgage was left at $160,000.
When she ended up leaving him, her name was on the deed, so she was entitled to half of the home, if they sold it.
Key words to remember: if they sold the house.
We were all pushing him as friends, to get him to sell the home so that he could be rid of that monster (it was in a bad location, and it is a seriously run down shack for the price. He totally over paid), and start a new life on his own.
We told him he could rent a small little studio (like us) near downtown, and his commute would be half hour at the most, instead of 2 hours.
No, no. Instead, upon the advice of his ex-common-law wife (brilliant move there), he kept the home and didn’t sell it.
On top of that, she convinced him to take out line of credit, and give her the entire amount of the loan in cash, so she could buy the second home.
He basically paid 50% of her second, new home, worth $140,000.
So now.. the math gets a bit tricky when you think about how much extra he paid, versus if she had just pulled her own financial weight.
The down payment was all of him – $40,000 when it should have been $20,000.
Then he still had a $160,000 mortgage to pay off, when half of it should have been $80,000 her responsibility.
And then he took out ANOTHER $70,000 in a line of credit as the “value of the home” as per her amateur estimates without consulting a realtor (*scoff*) and gave it to her as the second home.
The guy essentially ended up buying a house and a half, and took out a debt against a mortgage that he hadn’t even gotten rid of yet!
In the end, she ended up paying only 50% of the current home she owns.
Now about that $70,000 line of credit, when she asked for half from him in cash, he should have either sold the home and then split the net proceeds, or given her only half of the actual equity in the home that he had paid down in it, including the down payment, so around $40,000 not $70,000.
We also think she’s lying on her tax forms, taking money under the table or not claiming it, because the judge gave him the maximum amount for child support at $1000 a month for 2 kids, because she claimed that she only made $10,000 a year and not the $60,000 a year we’re estimating.
He totally, utterly, got f*cked, just because he picked the wrong woman, but also because he was too naive and trusting, especially with a banker involved.
TOTAL LIFETIME OF F*CKAGE ACHIEVEMENT ($)
- $40,000 (Life Savings for Down Payment)
- $140,000 (~$20k a year x 7 years of supporting her 100% while she saved her own income to leave him)
- $18,000 (A nice brand new car for her to drive, while he drove a cramped secondhand wreck)
- $160,000 (First House’s Entire Mortgage)
- $70,000 (Second Home’s 50% of the Home’s Value)
TOTAL: $428,000*
*But it’s not yet all paid of, of course. But that’s the total amount, before interest or any other fees.
And I’m sure that’s an extreme case of a story.. but certainly not totally out there.
Here’s one I found from FML…
This is why I am such a strong believer in 50/50 in relationships.
I really don’t think one party could not in the slightest, feel resentful that the other person is not pulling their fair weight in a relationship.
If not financially, they should be doing other things to compensate, like taking care of the home, laundry, managing finances, being the admin and heart of the home.
This is because I understand some people have health problems and cannot work normal jobs, but those are exceptional circumstances and certainly not the case in this relationship.
It just isn’t fair to have a spouse lay around, eat chips and bonbons on the couch, lie on her tax forms and say that her money is her money but not the family’s, make you work a full-time job, commuting 4 hours a day to pay for a home in its entirety, only to watch her walk away with half of your life, including your kids.
- How to get your free credit report (Canada)
- Why do you rent instead of paying for a home?
- Owing is not owning
- The Alternative to Cash & Credit or Debit Cards
- Keeping up with your credit card transactions
Rose
on Mar 4th, 2010
@ 3:44 AM:
It broke my heart to read this story – sad that she did that to him, and sad that he allowed that to happen to him.
I agree with you about relationships being 50/50. My partner and I have all finances in the open, contribute equally to household expenses, and once we start saving for a house, are going to be putting equal amounts in. I can't believe anyone would have it any other way (unless, as you also mentioned, extenuating circumstances existed).