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My sister and her then-SO bought a house together in September 2011. Sales price was $195K; they borrowed about $52K from mom for the downpayment (long story) and mortgaged the rest. He has since moved out, but has continued to pay half the mortgage (taxes are escrowed). My sister has been paying on the downpayment loan all along, but he has not. They're now starting to talk about her buying him out of the home, and trying to figure out what that amount would be. I'm getting myself confused with handling the downpayment loan, and thought I'd run it by you guys for an objective viewpoint! (My sister and the ex are worse with finances than I am, and my mom is unable to be fair in this situation, so it falls on me to figure this out!)
If they'd both been paying on both loans, I'd figure it this way:
Sales price: $238,000
Less mortgage balance: $138,000
Less DP loan balance: $45,000
Net gain: $55,000
50% gain (buyout amount): $27,500
Right?
Since he hasn't been paying on downpayment loan, though, it doesn't seem fair to me that he gets the benefit of the reduced principal amount. So would you treat the downpayment loan separately, and leave it off of the gain calculation? (My mom and sister will work out the difference between them, so he's basically dealing with "the family" rather than each of them separately.)
Sales price: $238,000
Less mortgage balance: $138,000
Net gain: $100,000
50% gain (buyout amount): $50,000
50% owed (original DP loan + 1/2 interest paid to date): $28,000
Net buyout: $22,000
(Should he be responsible for the interest? Technically it's been accruing on his half of the loan, since he hasn't been making any payments on it.)
Or would you just 'charge' him for half of the decreased principal on the DP loan?
Sales price: $238,000
Less mortgage balance: $138,000
Less DP loan balance: $45,000
Net gain: $55,000
50% gain (buyout amount): $27,500
Less 50% DP loan principal paid to date: $3,500
Net buyout: $24,000
Am I making this harder than it needs to be? I do want to be fair to both of them, and be sure that my mom's loan is covered. (They also own a condo together in another city that they're currently renting, and plan to sell later this year. On this one, my sister paid the entire $65K downpayment, about $14,000 for renovations, and $23,000 for 18 months when he left for a while. He thinks he's entitled to 50% of the gain from the sale. I'm hoping that by being fair in the home buyout, he'll be a little more reasonable about the condo sale. It's a straw at which I'm grasping, admittedly!)
Thanks for any insight!
If they'd both been paying on both loans, I'd figure it this way:
Sales price: $238,000
Less mortgage balance: $138,000
Less DP loan balance: $45,000
Net gain: $55,000
50% gain (buyout amount): $27,500
Right?
Since he hasn't been paying on downpayment loan, though, it doesn't seem fair to me that he gets the benefit of the reduced principal amount. So would you treat the downpayment loan separately, and leave it off of the gain calculation? (My mom and sister will work out the difference between them, so he's basically dealing with "the family" rather than each of them separately.)
Sales price: $238,000
Less mortgage balance: $138,000
Net gain: $100,000
50% gain (buyout amount): $50,000
50% owed (original DP loan + 1/2 interest paid to date): $28,000
Net buyout: $22,000
(Should he be responsible for the interest? Technically it's been accruing on his half of the loan, since he hasn't been making any payments on it.)
Or would you just 'charge' him for half of the decreased principal on the DP loan?
Sales price: $238,000
Less mortgage balance: $138,000
Less DP loan balance: $45,000
Net gain: $55,000
50% gain (buyout amount): $27,500
Less 50% DP loan principal paid to date: $3,500
Net buyout: $24,000
Am I making this harder than it needs to be? I do want to be fair to both of them, and be sure that my mom's loan is covered. (They also own a condo together in another city that they're currently renting, and plan to sell later this year. On this one, my sister paid the entire $65K downpayment, about $14,000 for renovations, and $23,000 for 18 months when he left for a while. He thinks he's entitled to 50% of the gain from the sale. I'm hoping that by being fair in the home buyout, he'll be a little more reasonable about the condo sale. It's a straw at which I'm grasping, admittedly!)
Thanks for any insight!
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