Q: I just sold a house I owned alone, and moved into a house that my fiance and I will share. The issue we’re facing is that the mortgage on this new house is in his name only.
Instead of refinancing and putting my name on the mortgage he wants to have me put on the deed with a quit claim deed. I have substantial equity to add to this new property and don’t want to get screwed if the relationship doesn’t work out.
My question is should I insist on refinancing so my name is added to the mortgage along with the deed? Or is being on the deed enough to protect my assets?
A: Believe it or not, your fiance may be giving you the better half of the deal.
By adding your name to the title, but not to the mortgage, he is giving you half ownership in the property without any responsibility for making the mortgage payments. Of course, you will contribute equity and cash to pay the mortgage, but you don’t have any legal liability for this debt.
If your fiance has a great rate on his mortgage, you don’t want to lose that rate by refinancing. Some day in the future when rates are low enough or when you have to refinance your loan, you can refinance the property into both of your names.
With the current mortgage, you need to make sure, however, that is getting paid on time, as are the real estate taxes, so that your property (and equity) doesn’t evaporate in a foreclosure. If both of you will be contributing to the monthly expenses of the home, I suggest that you set up an online account to pay the mortgage, taxes and homeowners’ insurance policy automatically. Then, you can make sure enough cash is deposited into the account to make those payments each month.
To protect your interests further, you and your fiance need to write and sign new wills in which you detail what will happen to the other half of the house you don’t own. You can solve this problem by putting the house into both of your names as joint tenants with rights of survivorship. That way, if your fiance dies, you’ll have ownership over the entire house. Make sure your wills cover all of your assets. This is a good time to discuss what each of you has and is bringing to the table.
In addition to wills, you and your fiance should sign powers of attorney for financial matters and health matters. Be sure your attorney has copies of all of your documents. You should keep executed copies in a safe place as well, such as a safe deposit box.
Money discussions are never easy, but this whole business of putting your name on title is a great opportunity to get it out into the open.
Oct. 23, 2007.