Q. My husband and I are working on the terms of our divorce bringing a bullet point outline to an attorney to draft for us. We bought the house when I was in grad school so the house and mortgage are in his name. He says he should have the first right to buy me out.
We agreed on a buyout price which gives me a significant down payment. The problem is, he has a 30-year fixed mortgage at 3% interest and my rate is going to be 6%. If I’m going to live in the same town in a comparable house for our kids, I will need to take on a $750,000 mortgage. This means annual interest of $45,000 where his is only $22,500. This hardly seems fair, but I don’t know how to think about it or how to express it to my husband.
A. This is a relatively new problem we are starting to see and one which there is not yet any caselaw to guide us. Most people are stuck trying to get one party’s name off a mortgage so consider yourself lucky that you and your husband don’t both have to take on significantly larger interest rates. That being said, because he is not stuck in the same boat as you, it only seems fair that you get a break somewhere.
I don’t think asset division is the way to resolve this. It really amounts to a cash flow problem that should be sorted out in child support or alimony. I don’t know what your respective incomes are in terms of who is paying child support and/or alimony to the other. One way to level the playing field would be to reduce your obligation for child support/alimony by the $22,500 in interest you are paying for the privilege of living in a similar home so that the children do not feel a disparity when they are with you. But a judge may reject that deviation from the child support guidelines.
Also, that doesn’t work if you are the support recipient as he probably does not want to pay additional support. Suggest that your husband be responsible for the first $22,500 of annual extra-curricular expenses for your children and/or uninsured medical expenses. If that still doesn’t get you there or he doesn’t like the idea, suggest he put aside $22,500 per year into college savings account which would then be considered contributions from both of you at the time the children go to college.
Hire the lawyer now to act as a mediator and help the two of you brainstorm through this issue.
Email questions to whickey@brickjones.com