Mom owns the house but I pay the bills. What do I do now? Welcome to the inaugural Love & Money Column. In this column, a reader says her mom owns the house, but she pays all the expenses. She’s ready to put the house into her name, but is worried about causing an issue with her siblings. How would you answer her? Feel free to leave your responses on the column and also send your own questions to me at [email protected]
Mom owns the house but I pay the bills. How do I get the house in my name?
Q: I’ve lived in my house for the past 10 years. Well, it’s not exactly my house. I’ve been paying all the bills, but I couldn’t qualify for the mortgage loan 10 years ago, so my mom put her name on the house.
But I’d really like to have this house in my own name. I’m wondering if she can transfer the house to me or can I just assume her mortgage?
I want to refinance the house but my credit isn’t great
One problem is that my credit hasn’t improved all that much over the past 10 years, so I’m not sure I can actually qualify for a refinance. I think Mom is ready for her name to be off the title to the house. She doesn’t want something to happen to her while she is on the hook for the mortgage. Meanwhile, I’m sure having the property be in my name would be good for our relationship, not to mention my credit.
Mom owns the house: My siblings want a share
The other wrinkle is that my siblings think they’re entitled to a share of the house if something happens to mom, even though I’ve been paying all the bills since Day 1.
How do I fix this?
It’s tough to mix Love & Money
A: Whenever you mix love and money together, it has the potential to be explosive. You’ve got most of the components for a potent mix of trouble, but there are some clear steps you can take that will help your finances without stirring up family relationships.
You pay the bills: Why haven’t you improved your credit?
First, you owe your mom a big “thank you” for helping you out 10 years ago when you couldn’t qualify for a mortgage. When you’re starting out in life, your credit score is often low. You might have made mistakes with paying your bills. Or, you might not have added positive credit information to your credit history.
But what happened since then? I wonder why you haven’t fixed the issues and raised your score significantly since then.
Most big credit issues simply fall off your credit history after 10 years, or at least they have far less of a negative drag on your credit score. The fact that your credit score hasn’t improved much tells me you haven’t been using your time wisely. To clean up your credit, start paying your bills on time and in full, if possible, and if not, then make the minimum payments owed each month. To further burnish your credit, reduce the amount of available credit you’re using each month. (Ideally, keep the balance on your credit cards below 30 percent of your total available credit.)
Mom owns the house. Can you assume the mortgage?
Mom now wants you to remove her from the title to the property and have you take over. If she has an FHA loan, you may be able to assume that mortgage. Assuming the mortgage requires approval by the mortgage lender.
Pull a copy of your credit history and credit score from each of the three reporting bureaus, Equifax, Experian and Transunion. Each of these credit reporting bureaus offers a free online credit score and access to your credit history so you can see what issues are depressing your score.
Once you review your credit history and score, make a plan to fix those issues and raise your score. Then, talk to a few different local lenders about what credit requirements they have. With any luck, you’ll discover that you can qualify for a loan you can afford, especially if you’ve paid down the mortgage over the past decade.
You pay the bills, not your siblings
Now, let’s talk about your siblings. While your mom owns the house, you paid all the bills plus provided the cash for the down payment and closing costs. In my mind, that relieves you of the obligation to pay them anything once your mom transfers this asset.
But why not have a conversation with them and mom? Once you work out your plan to refinance or assume the loan, sit down with your siblings and walk them through the numbers. They will want to know how much you paid (vs. how much mom paid) and what is your plan to take over the title and mortgage.
Your siblings aren’t entitled to anything other than information. They should be relieved to know that lending you her signature cost mom nothing; taking the property out of her name relieves her of any liability going forward. If they insist that they get a portion of the profits (assuming the property has gone up in value) then you and your mom will have to decide what to do.
If you owe anything, it’s to your mom. How you thank her for helping you achieve your dream of homeownership is up to you.