Posted on: 20th Sep, 2008 02:03 pm
Loan balance at time of divorce was $155,000. I refinanced for $220,000 to pay ex's potion of the equity which was $65,000. The house is now worth approximately $150,000. If the lender were to foreclose on me, would they consider my refinanced loan to pay off equity as a purchase-money only loan? If they did, this would mean that the lender could not come after me for any deficiencies in the repayment of the loan by a private sale of the house.
Hi sambushman59
If there is foreclosure on your property, you will be liable to pay back the entire amount outstanding out of $220000. Now under foreclosure, not only you lose your home, but also the lender can bring judgment against you to recover the remaining money which is deficient after sale of the property, plus his cost of foreclosure.
If there is foreclosure on your property, you will be liable to pay back the entire amount outstanding out of $220000. Now under foreclosure, not only you lose your home, but also the lender can bring judgment against you to recover the remaining money which is deficient after sale of the property, plus his cost of foreclosure.
the specific answer to your question is that your refinancing cannot be considered purchase-money. clearly, your refinance to pay your former spouse was for the purpose of paying original equity as well as earned equity for the time you'd been inhabiting the home.
I didn't mention that I am in Calif. where the lender cannot bring judgment against the foreclosing owner if the mortgage was taken out as a purchase money only loan. My question is--Is a refinance that is taken out to pay off the equity of an ex considered a purchase money only loan since you are buying out the ex's equity in the home, and thus purchasing part of the home from the ex? Or is this kind of refinance considered a cash out type deal, the same as refinancing to get cash out for a remodel, or a new car, etc.?
your borrowing to pay back your former spouse is cash-out. in order for funds to be considered "purchase money" it would have to be in relation to a "purchase" of a home.
when you borrow to purchase, that mortgage is a purchase-money mortgage. when you borrow for any other purpose, and receive cash back, those funds represent cash out.
when you borrow to purchase, that mortgage is a purchase-money mortgage. when you borrow for any other purpose, and receive cash back, those funds represent cash out.
I refinanced because I was convinced by someone that I thought was a "friend" to refi... They told me I would get cash, but I ended up getting no cash, a 1st option ARM and a HELOC -- It was all used to pay off the 1st and 2nd that I had originally. I am in California. Will these loans be considered purchase money?
Welcome Mike Chappars,
I don't think it will be considered as a purchase money. It will be considered as a conventional mortgage.
I don't think it will be considered as a purchase money. It will be considered as a conventional mortgage.
mike, it is absolutely not purchase money. the only way a mortgage is a purchase-money mortgage is when you purchase a home. see my earlier post. refinancing, whether buying someone else out or not, cannot be considered purchase-money.
So a mortgage refinance is NOT a purchase money loan.
Hi Stevie,
You are correct. Mortgage refinance is not a purchase money loan. Refinance will help you to pay off your current mortgage with a new loan. This new loan may have favorable rate and terms which would be easier for you to manage.
Thanks
You are correct. Mortgage refinance is not a purchase money loan. Refinance will help you to pay off your current mortgage with a new loan. This new loan may have favorable rate and terms which would be easier for you to manage.
Thanks
as previously stated, in the previous 14+ months...
My husband and I are still married, but living apart and will eventually divorce.
He refinanced our home and gave me 50,000. so that he could keep the house. I signed a document waiving my rights to the property, the bank gave him a new loan and my name was taken off the mortgage and the deed. We live in the state of Maine. Am I liable for the 50,000 in taxes? He wants to file married seperate so that he does not have to be liable tax wise. Does this money have to be claimed as income if I must file alone? Thank you
He refinanced our home and gave me 50,000. so that he could keep the house. I signed a document waiving my rights to the property, the bank gave him a new loan and my name was taken off the mortgage and the deed. We live in the state of Maine. Am I liable for the 50,000 in taxes? He wants to file married seperate so that he does not have to be liable tax wise. Does this money have to be claimed as income if I must file alone? Thank you
Welcome Pattie,
As far as I can understand your situation, the money that you received from your husband will be considered as an income and you may be liable for paying taxes. You can contact a tax consultant and he may help you in this regard.
As far as I can understand your situation, the money that you received from your husband will be considered as an income and you may be liable for paying taxes. You can contact a tax consultant and he may help you in this regard.
I refinanced my house for improvement purposes. Is that loan considered income?
no it is not cheyenne. borrowed money is never considered to be income - you have to pay it back after all, don't you?
I purchased a home in 2005 with a 2 year 80/20 interest only loan. . In 2007 i refinanced to consolidate both just before the loan reset. I now have a 5 year interest only loan. Since I wont be able to refi in 2012 because I doubt the 145000 Im upside down will change. If i end up being forclosed on will i be liable ? no money was taken out in refi.