Author Topic: girlfriend moving in (mortgage and saving options)  (Read 4120 times)

johndoe

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girlfriend moving in (mortgage and saving options)
« on: March 05, 2017, 08:31:18 AM »
My girlfriend and I are getting more serious,and she's moved in with me.  It was a way to test our relationship, but marriage is still far away.  I am paying off a mortgage (about $35k remaining out of $160k).  The loan has been recast so I have a relatively low monthly payment and I'm able to max my 457.  She also has a mortgage, but has hardly any equity.  She's currently paying her loan but the property sits mostly unused.  Her HOA doesn't allow her to rent it out.  So economically, it seems to make most sense to sell it.  I don't think our relationship is at the "one bank account " stage (which I need to research more) , but she wants to contribute to my house payment.

I assumed it would be easiest if she just "rented" from me.  She (and her parents) think if my house remains solely in my name she is sort of taking a step backwards (owning back to renting) .  I guess another option is some sort of refinance where we both are listed on the title.  This would allow me to throw all my equity in some sort of investment (scary to a novice as myself! ) and give her the feeling of ownership.  I fear this is a much bigger step for our relationship, and if we decided to part ways would result in a much bigger headache (legally, financially, etc) .  Are there other options aside from these two?  Am I being selfish by suggesting I hold onto all the equity? What would you suggest?

inthemountains

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Re: girlfriend moving in (mortgage and saving options)
« Reply #1 on: March 05, 2017, 08:44:59 AM »
My now-husband and I were in this position several years ago. I sold my home and moved into his. I paid him rent. In our case, it was just easier than trying to sort out whose equity was whose - he had a much bigger stake in his home than I did or would. We figured we wouldn't be there forever so it was worthwhile to keep it simple. It didn't bother me in the least to go "backwards" from owning to "renting". If it bothers her, that's something you'll need to work through. If it bothers her parents, they can mind their own business. (You can't control what other people think so, for me anyway, what her parents think wouldn't even be a variable in the equation.)

When we moved a year or so later, we bought a home together with both names on note and deed, each paying 50% of the mortgage. That way if we split, there was no arguing about the division of equity - 50/50. But this wouldn't have worked as well with the home we lived in originally - he already had quite a bit of equity in it and my "share" would have been so small, it just wasn't worth the drama of dealing with it if we split up.

If you plan to live there for a long time and get married somewhere in there, she might have a 50% stake in the equity anyway, depending on your state. If not, you could do a sort of a prenup in which a certain percent of equity in the house is hers, if you split later.

We're married now and - I think maybe out of habit - we got married a little later in life - we still keep finances separate. We have a joint checking account but each deposit X into it every month, then pay mortgage, utilities, etc., from that account.


Catbert

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Re: girlfriend moving in (mortgage and saving options)
« Reply #2 on: March 05, 2017, 12:19:41 PM »
If you're not at the one bank account stage, you're definitely not at the one mortgage stage.  If you split up this would be a nightmare.  Just don't do it.  Keep long-term financial ties to zero until marriage.  Even a joint bank account (when you're ready) should just be for monthly expenses.

Is moving into her place an option while renting out yours? 

GizmoTX

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Re: girlfriend moving in (mortgage and saving options)
« Reply #3 on: March 05, 2017, 01:31:32 PM »
You should not be buying anything major together unless you are married. One person has title, the other rents.

If moving into her place & renting yours is not an option, then she should sell hers & use the proceeds for investments that will bring her a return on her equity while renting space at your place.

You both are still benefitting because your individual costs should become less by sharing.

Frankies Girl

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Re: girlfriend moving in (mortgage and saving options)
« Reply #4 on: March 05, 2017, 02:23:49 PM »
You should not be buying anything major together unless you are married. One person has title, the other rents.

If moving into her place & renting yours is not an option, then she should sell hers & use the proceeds for investments that will bring her a return on her equity while renting space at your place.

You both are still benefitting because your individual costs should become less by sharing.

+1

Do not put her on the title to anything unless you're married (not getting married - MARRIED). Keep finances separate. It is a huge mess to untangle if you break up, and the law will likely make you split your home 50/50 despite what she may or may not have paid towards the mortgage - especially unfair if she sells her property, keeps 100% of that, and still gets 50% of your property if you break up because you thought putting her on the title was a nice gesture so she doesn't feel like she's taking a step backwards.

Not sure why her parents opinion have any standing on what you and she decided (and concerning if they are going to have a major voice going forward in your relationship), but the fact that you didn't sort this out before she moved in means there will likely be much tension and upset about getting the situation hashed out after the fact.

I seriously can't emphasize this enough about how disturbing it is to me that y'all moved in together before figuring out you were going to deal with an extra property, paying for things, and basic living arrangements. Talk out major life decisions before - religious stuff, money stuff, kid stuff - don't assume and don't take it for granted that you will be in agreement. Don't either one of you decide things like  "it's time to have a kid" and do it before discussing whether you want any, how many, how you'll deal with who takes care, etc... same thing with the living situation. This just does not bode well for your future relationship that you can't see the minefield in front of you and both realize you need to sit down and work out a plan before running out into it (and inlaw interference is likely as well? Damn, man...)

Iplawyer

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Re: girlfriend moving in (mortgage and saving options)
« Reply #5 on: March 05, 2017, 03:29:29 PM »
Please get thyself to an attorney before doing anything like putting her on a title. Please. It will cost a fraction of what it would cost to fix on the backside.

Lmoot

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Re: girlfriend moving in (mortgage and saving options)
« Reply #6 on: March 05, 2017, 03:34:54 PM »
Do not put her name on the title. Someone petty enough to decide that renting is a step backwards from owning, would be petty enough to entitle themselves to the investment you worked hard to pay down and made a prudent decision in purchasing.

Don't take her money from the sale...keep things separate until you are married. If she (and her parents) want her to own a home so badly, then she can sell her house, and buy a property somewhere that will allow her to rent it out. Afterall, being a property investor is a step up from being a homeowner :)

johndoe

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Re: girlfriend moving in (mortgage and saving options)
« Reply #7 on: March 05, 2017, 09:11:33 PM »
Thanks for the input so far. I almost edited the post because I knew the "going backwards " verbiage would not stand here :)  I'm just conveying their opinions, right or wrong.  Regarding her parents, it's not as if they're "forcing" her into anything, they just had that opinion when they heard we started living together.

As far as discussing big issues (Frankies girl) yes this "experiment" has been productive for talking budget, future, etc.  It sort of started with her staying over all the time anyway, and gradually she moved some clothes, etc in.  I definitely want to go slow, and not do anything drastic. It's interesting to me because I split a house with a buddy when I first graduated (50/50, both on title) and never seriously considered pitfalls of any falling out between us.  Luckily everything worked out that time!

Lews Therin

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Re: girlfriend moving in (mortgage and saving options)
« Reply #8 on: March 06, 2017, 05:59:32 AM »
It is possible to draft documents in order to ensure that even though she is on the title; if it doesn't work out between you two, you are allowed to pay her the value of what she paid on the mortgage, and "buy" her out.

It requires her signing documents with you to that effect, however at that point, you are probably able to simply show her the math of what the fixed costs are for having a house (interest and taxes) and simply pay the principal yourself. That way, if you are each splitting the fixed costs, your saving go into the principal, and she can simply use a savings account of invest it.

It's a very rational and objective way to split the property woes; without either person being taken advantage of.

FindingFI

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Re: girlfriend moving in (mortgage and saving options)
« Reply #9 on: March 06, 2017, 06:43:51 AM »
My boyfriend and I were in the exact same situation a couple years ago.  He had a mortgage on a house with significant equity and I had a mortgage on a condo with decent, though much lower equity.  Similarly, I was also not able to rent out the condo because of HOA rules. I moved into his house and sold my condo, investing the proceeds from the sale.  We did not add my name to his house.  Not contributing towards housing expenses didn't feel right, so we worked out an agreement on how much I would give him in "rent" each month and how we would split the other household bills (electricity, internet, groceries, etc).  The amount that I give him is  less than half the mortgage, and that was intentional.  If I were paying half the mortgage each month, then that would put me in at a disadvantage in the event that we split up.  I would be giving away the equity in his house that I had contributed.  So instead, I'm paying less towards the mortgage and investing the difference.  If things don't work out, he has some added equity and he wins, and I have an investment account that I can tap to find somewhere else to live and I win.  Even better, when things work out great, we both have home equity and an investment account.  The arrangement works out in both of our favor no matter what happens.

As far as feeling like "renting" is a downgrade from home ownership, it doesn't bother me one bit.  In fact, it doesn't feel like renting at all.  I still have all the flexibility of home ownership, I just don't have my name on a piece of paper (or the tax deductions).  I have no regrets about selling my condo and becoming a "renter" again.

honeybbq

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Re: girlfriend moving in (mortgage and saving options)
« Reply #10 on: March 06, 2017, 09:44:29 AM »
I guess I don't think it's fair that she has to pay her mortgage AND rent to you. I'd say she should split the household bills she contributes to (water, electricity, etc) but until you are really ready to go down to one house, she has her own mortgage to pay! Why did you pick your property? Would you be wanting to pay rent to her and pay for your own mortgage if you moved in with her?

GizmoTX

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Re: girlfriend moving in (mortgage and saving options)
« Reply #11 on: March 06, 2017, 10:33:00 AM »
I disagree; it's not the OP's fault or problem that the SO bought an unrentable property. If they were married, they wouldn't leave a house unoccupied. BTW, unless occupied, home insurance becomes very expensive or unavailable. The elephant in the room is about keeping separate property separate until marriage. I can see if she and/or the parents are concerned that the relationship might not last & want to retain her house 'just in case', but home ownership in this situation is not a step forward form of investment -- it's a non-trivial expense.

What would they do if they were both renting? Likely get rid of one, split the other.

2Birds1Stone

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Re: girlfriend moving in (mortgage and saving options)
« Reply #12 on: March 06, 2017, 10:46:08 AM »
I would not put her on the deed/mortgage.

Regardless of how good you may feel about the relationship, it's going to end poorly if you split.

You could rent to her, at a discounted rate. That way you are getting some help and compensation for the potential increase to utilities, but at the same time you are keeping your finances separate.

boarder42

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Re: girlfriend moving in (mortgage and saving options)
« Reply #13 on: March 06, 2017, 10:59:36 AM »
i would

1. charge her rent
2. refinance your house and take cash out and dump it into the market
3. drink a beer and watch your stash grow rather than sit in an illiquid asset for no damn reason.

Retire-Canada

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Re: girlfriend moving in (mortgage and saving options)
« Reply #14 on: March 06, 2017, 11:51:45 AM »
My GF pays me rent to live in my house. We are serious enough I would put her on the title if she wanted, but she didn't want to buy in initially and didn't take me up on the offer at the 5yr mark when I got a new mortgage. I don't plan to offer it to her again.

All in costs to live at the house are $28K/yr. She pays me $1K/month or $12K/yr. I pay the rest so $16K/yr, but I get ~$15K/yr equity.

She's paying less than it would cost in rent to live someplace comparable [probably by $500/month], is not on the hook for repairs/maintenance and doesn't care if the housing market tanks.
« Last Edit: March 06, 2017, 11:55:24 AM by Retire-Canada »

Iplawyer

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Re: girlfriend moving in (mortgage and saving options)
« Reply #15 on: March 06, 2017, 12:44:52 PM »
It is possible to draft documents in order to ensure that even though she is on the title; if it doesn't work out between you two, you are allowed to pay her the value of what she paid on the mortgage, and "buy" her out.

It requires her signing documents with you to that effect, however at that point, you are probably able to simply show her the math of what the fixed costs are for having a house (interest and taxes) and simply pay the principal yourself. That way, if you are each splitting the fixed costs, your saving go into the principal, and she can simply use a savings account of invest it.

It's a very rational and objective way to split the property woes; without either person being taken advantage of.

OP - please don't take legal advice from people on this forum - especially when it has to do with real property.  You have a lot to lose.  The law on this is very dependent on what state you are in.  Please go discuss this with an attorney.  Most give a first consultation free.  There are too many pitfalls to even discuss here.   Really.  I know and love property law really well in two states.  I don't know anything about it in any other states.  And there are other areas of law that are implicated by this.  For instance, in Texas, you can be common law married - and one fact in that favor is joint property ownership.  There are probably more I'm not even bringing up. 

Go see an attorney so you don't end up in court if things go south. Because you can sign anything and she can still sue you and refuse to cooperate.

caracarn

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Re: girlfriend moving in (mortgage and saving options)
« Reply #16 on: March 06, 2017, 01:48:12 PM »
I disagree; it's not the OP's fault or problem that the SO bought an unrentable property. If they were married, they wouldn't leave a house unoccupied. BTW, unless occupied, home insurance becomes very expensive or unavailable. The elephant in the room is about keeping separate property separate until marriage. I can see if she and/or the parents are concerned that the relationship might not last & want to retain her house 'just in case', but home ownership in this situation is not a step forward form of investment -- it's a non-trivial expense.

What would they do if they were both renting? Likely get rid of one, split the other.

When we got married (and we did not move in together before that so did not have that headache), my spouse had a condo.  It was also not allowed to be rented and the thing that did get us to move to sell it quickly was the insurance cost.   In our state once the house was unoccupied for 90 days it would move to unoccupied insurance which as indicated is very expensive. 

Cassie

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Re: girlfriend moving in (mortgage and saving options)
« Reply #17 on: March 06, 2017, 05:43:35 PM »
I think each of you should just pay your own mortgage and if/when you decide to get married you can solve the house problem.  This way if you split she can go back to her home. It makes no sense for her to pay you rent when she has a mortgage.

TravelJunkyQC

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Re: girlfriend moving in (mortgage and saving options)
« Reply #18 on: March 07, 2017, 07:21:30 AM »
I can only give my own experience on the matter, as I'm the girlfriend who moved into my BF's condo and am not on the deed. The way we function is the following:
Everything is in his name (mortgage, condo fees, internet, electricity). We calculated the total for all of these "living" expenses monthly. We deducted the amount of the mortgage principal (because these are like savings that will come back to only him when the condo is sold). Everything else is split between us pro-rata according to our salaries. I deposit my amount of this into a joint account, and this is what we use for our groceries and other shared expenses that aren't mentioned above. This way, I'm "renting" from him, but not technically contributing to his mortgage principal because I have no rights to the condo.

This method has been working for us currently. We just purchased a piece of land together and will be building a house jointly, but we've lived this way for the past 3 years and neither of us feel taken advantage of.

I have my own condo as well, although it has been rented, so hasn't caused issue. I would suggest she sell her place. If it's sitting empty, I don't see what the use is.

In terms of what the above poster said - I don't necessarily agree that she shouldn't pay you rent just because she has her own mortgage. If she's using your condo to live, she should contribute to its upkeep, right?
« Last Edit: March 07, 2017, 07:24:19 AM by TravelJunkyQC »

Fishindude

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Re: girlfriend moving in (mortgage and saving options)
« Reply #19 on: March 07, 2017, 07:36:15 AM »
Have her move in and sell her place.  No need for her to pay you rent, if you really care for her, let her live there.
Keep your money separate unless you get married.  Her contributions can be things like groceries, help with work around the place, buying furnishings, etc.

This way, if things go south she can just rent or buy a new place, take her stuff and leave.
« Last Edit: March 07, 2017, 08:48:14 AM by Fishindude »

Retire-Canada

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Re: girlfriend moving in (mortgage and saving options)
« Reply #20 on: March 07, 2017, 08:09:26 AM »
If you want to be aggressively "fair" charge her:

- 50% of the bills [including home insurance]
- 50% of the mortgage interest
- 50% of the property taxes
- 50% of maintenance amortized over a reasonable period [ie. if you replace the roof charge her a portion each year]

Don't charge her for any principal you pay on the mortgage.

She can't really complain about this ^^^. You can still benefit from price appreciation/equity build up, but you are also taking all the capital risk if there were to be a market crash.
« Last Edit: March 07, 2017, 08:14:54 AM by Retire-Canada »

Lews Therin

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Re: girlfriend moving in (mortgage and saving options)
« Reply #21 on: March 07, 2017, 08:13:06 AM »
Or a % proportional to her salary.

Retire-Canada

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Re: girlfriend moving in (mortgage and saving options)
« Reply #22 on: March 07, 2017, 09:22:46 AM »
Or a % proportional to her salary.

Sure that's fair if you guys have a serious disparity in your incomes and it's not due to something optional like working PT or taking an easy job despite being able to earn more $$.

frugaliknowit

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Re: girlfriend moving in (mortgage and saving options)
« Reply #23 on: March 07, 2017, 10:09:50 AM »
She should pay you 1/2 the rental value.  She should sell her condo, since she can't rent it. 

Only for purposes of teaching others (not to scold you guys...plus I've "been there before", LOL!!):  Folks, the time to discuss and figure this out is BEFORE you move in together:)

SwedishMoustache

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Re: girlfriend moving in (mortgage and saving options)
« Reply #24 on: March 07, 2017, 10:37:58 AM »
As someone with a legal background, and someone who's father also has a legal background, i'm going to go ahead and leave this piece of advice here.

Do not merge anything without proper legal guidance, preferably a pre-nup or a legally binding agreement of some sorts. Maintain different financials until all of these questions are crystal clear.

The biggest roadblock on your road to FIRE is potentially (POTENTIALLY, mind you, because they can also be a tremendous source of strength) a spouse, partner, girlfriend or boyfriend. Especially if they do not share this goal. Especially if after 5 years and you're close to FIRE, she decides (or he) to leave you and take half of what you own. Then your FIRE might be put back 5-6 years.

I'm not telling you to be selfish - i'm telling you to be logical. As i would, and have, to many people in this situation.

A partner can be a  tremendous source of strength, an ally and a reason to reach and a way to reach FIRE very early.


Google a bit. There are plenty of dividend investors and other kinds of "moustachians" who have had a timely retirement cut short by divorce - i know two names off-hand. Their net worth/investment down from near-FIRE to less than half of what they had. It's not a pretty picture.
But a partner can also be a tremendous source of ruin, someone who wrecks you, takes what you own and sets back your plan to FIRE several years. Or, if it's bad enough, forever.
« Last Edit: March 07, 2017, 12:53:58 PM by SwedishMoustache »

Tiger Stache

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Re: girlfriend moving in (mortgage and saving options)
« Reply #25 on: March 07, 2017, 11:53:17 AM »
don't merge any finances or put her on any legal documents related to you if you're not MARRIED. You don't sound that serious about her anyway if you made a point to say marriage is still far away.

GizmoTX

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Re: girlfriend moving in (mortgage and saving options)
« Reply #26 on: March 07, 2017, 12:48:55 PM »
I wouldn't even open a checking account together for shared expenses. Use Splitwise or similar application to show who owes what & payment status. OP needs to have all house utilities in his name, with SO reimbursing her share. Either one can pay for food, which might need some frugality rules.