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|Home & Real Estate: Mortgage advice for LGBT couples|
|by Dyana Bagby|
|March 02, 2012 00:00|
Home ownership can be tricky for same-sex couples — especially since we don’t have automatic property inheritance rights if one partner dies, and we don’t have easy access to divorce courts to help us sort out disputes if we break up.
That means lesbian and gay couples need to take time to think through the best ways to structure home ownership and mortgages when purchasing a home, well before any problems arise.
We asked Mercedes Pasqualetti — general manager for HLM Financial Group, which offers accounting, tax, mortgage and financial planning — for advice on common scenarios involving same-sex couples and home ownership.
Of course, everyone’s situation is unique, so you should consult an expert for individual advice.
My partner and I are moving in together and buying a house. What should we consider before putting both of our names on the mortgage?
The main thing to consider when buying a home together is that the debt is joint. If something should happen to the relationship and one of you moves out, you are both still responsible for the debt, no matter who remains in the house.
In order to remove one person’s name from the loan, the other would have to refinance in their name only. Sometimes this can become a real issue if value goes down, one person has better credit than the other, or one person’s income carried the loan and the other cannot obtain new financing.
You may also want to think about the tax impact. If one person had a loan and the other did not, now there is a potentially lower tax write off by having to split the interest and taxes each year. It is good to have a tax preparer who can look at the numbers so that the combined household tax liability is limited as much as possible using the house and real estate taxes.
When my partner and I bought our house, we put the mortgage in just her name because I had credit problems. It’s been several years and my credit is better. How can we add my name to the mortgage?
It is necessary to refinance the current loan into both names. This means a new loan and the process that goes along with it.
I own my condo and now my new partner is moving in. He will contribute half the expenses. Does that mean he gets a share of the house if we ever break up?
Not necessarily. If you do not put his name on the house via a Quit Claim Deed, which transfers ownership from you to both of you, then he is not entitled to half the house. You may want to consult an attorney on this issue.
I bought my house before I met my partner, but we have lived here together and shared expenses for years. How can I make sure he gets the house if I die?
You will need to have a Quit Claim Deed prepared and filed in your county transferring the ownership from you as a sole owner, to both of you as Joint Tenants with Rights of Survivorship. If anything happens to either of you ownership would automatically transfer to the remaining partner.
Some loans have stipulations that this cannot be done without approval from the lender. Check your Mortgage Note for any stipulations.
What is the most common mistake you see LGBT couples make when buying a home together, and how can I avoid it?
One large mistake LGBT couples make is not having some sort of formal agreement in place as to what would happen if they break up. Once the names are signed on the dotted line, it is hard to become separate again.
Not that we ever want to think of our blissful union as breaking up, but I have seen it happen many times and the house is one of the hardest issues to resolve. Spelling out an agreement while you are in love and happy with each other could potentially save you tons of time, headache and money down the road.
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