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 mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. 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 deedA Quit Claim Deed is a deed that operates to release any interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. in a property that a person may have, without a representation that he or she actually has a right in that property. For example, Sally may use a quit claim deed to grant Bill her interest in the White House, in Washington, DC, although she may not actually own, or have any rights to, that particular house.. I have substantial equityYour share of ownership in a company. Stockholders are often referred to as equity investors, because they invest in the equity of a company. 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 titleTitle refers to the ownershipOwnership is the absolute right to use, enjoy, and dispose of property. You own it! of a particular piece of property., 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 loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interest., 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 estateReal Estate is land and anything permanently attached to it, such as buildings and improvements. taxes, so that your property (and equity) doesn’t evaporate in a foreclosureForeclosure is the legal action taken to extinguish a home owner's right and interest in a property, so that the property can be sold in a foreclosure sale to satisfy a debt.. 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.