Co-habitating question

[sav_n00b]

Hi folks! Been lurking for a while and finally decided to post on these awesome boards. Go easy on me, please.

GF is moving in with me in the near future. (In case it would come up, yes, this is a long-term marriage-type commitment for both of us. No, we aren't getting married because we can't legally marry in the U.S.) While we are both making a serious commitment, we both also want to be smart and practical about it. For the first year or so, we will be taking a yours, mine, and ours approach to finances. That is, we each have our own money, but split household expenses. I have a house, and a mortgage, in my name. Our plan was to leave that as is for this one year period. If all is going good after that, then reconsider adding her name to the house/moving into a new place of our own, etc.

For this year, however, I'm not sure how best to handle this, for two reasons. 1- Maintaining a good credit record for her. She's concerned that not having a lease/mortgage/utilities in her name during this time might be detrimental to her credit (even though she does have credit cards in good standing, several paid auto loans, other positive credit items). Does anyone know if/how much of an affect this might have?

Reason 2 - I know there are issues with having someone living in your household and contributing to your mortgage. Perhaps it's a "check your state laws" thing, in which case we'll consult with an RE attorney, but I thought you wise folks might have some knowledge to share. Would it be best to draw up a lease with terms we both agree to? Would that NOT be advisable?

I don't want it to come off that we don't trust each other, or expect the other to screw us over. We're both old enough and experienced enough to know that sometimes despite the best intentions, things don't end up like you'd wanted, and we want that possibility to be handled with as little headache as possible.

Thanks for your input!

[Redraidernurse]

My close friend had a boyfriend who lived with her for a year and they broke up....end of story, right? WRONG. He got a lawyer and sued her claiming it was a common law marriage and he was entitled to half of her assets. He won the suit and she is still astonished to this day. My advice: Get everything in writing.

[bjl584]

Be aware of each others' finances, but don't mix them until you are married.

[sav_n00b]

Thanks, but as I've said, we cannot get married. Living together is as hitched as we can get.

So, get everything in writing meaning, sign a lease?

[disneysteve]

Be aware of each others' finances, but don't mix them until you are married.

I agree. You can work on things together and keep track of things together but don't do any joint accounts, don't put her name on the house or on anything else unless you are married. If you aren't able to get married, don't ever combine finances.

I don't think not having a mortgage will negatively affect her credit. It is no different than if she were renting an apartment. That typically doesn't show up on the credit report either. If you really want to, you could transfer one of the utility bills into her name. Just don't make the account joint with both names. You are single and will remain single so no joint accounts.

[sav_n00b]

.. If you aren't able to get married, don't ever combine finances.

I appreciate that, but don't agree. The day will come when a gay couple can get married, but if we have a need/desire to combine finances before that day comes, we will do so.


Thanks, also, for the input about not having a lease not being a big deal in terms of credit. I think I had assumed it would not be, but it helps to have another viewpoint backing that up.

[disneysteve]

The day will come when a gay couple can get married

I agree and hope that day comes soon, but that doesn't change my advice today. Unmarried partners, whether hetero- or homosexual partners, should keep separate finances. Married couples have legal protections that unmarried cohabitants don't have.

I would make sure to update your wills, your account beneficiaries and any other legal documents like power of attorney and such to reflect this person as your partner.

[littleroc02us]

I know it sucks, but those are the laws. You could put her name on the mortgage, but what happens if one of you decides not to continue the relationship and doesn't feel like paying the debt? The law will consider it equal responsibility for repayment and they would come after you.

[skydivingchic]

First, look up the common law rules in your state. They may well not apply to you guys as a gay couple, but they may affect you and you should certainly know that information.

DBF and I have been cohabitating for years now and do have a mortgage together. When we first took out the mortgage it was titled as tenants in common and we had a tenant in common agreement which spelled out what would happen in the event of a breakup or death. We have since changed the manner in which the property is titled to joint tenants so that it would pass automatically to the survivor in the event of a death.

If you want to keep the property in your name only for a year, I would advise writing up a lease with terms you both agree to. After a year, revisit the topic and if necessary determine how you would like the property titled.

Also as has been advised, update/get wills, advance health care directives, powers of attorney, etc as appropriate/necessary for your situation. These things are especially important for unconventional partners as the laws as written won't recognize you at all in the event of an emergency.

As DS pointed out, not having a lease or mortgage is unlikely to have an affect on your partner's credit as leases/rent agreements are not generally reported on credit reports. Neither are utilities, so again it won't have an impact.

[LuckyRobin]

Even though you can't legally get married there's got to be some sort of lawyer-y pre-nup type agreement thing you can do if you are worried about the legal side of things. Something that just legally says if your relationship dissolves you get what you came into it with and split any assets incurred together either 50/50 or based on whoever bought it. It can always be ammended if you decide on joint ownership in the house.

[sav_n00b]

Thanks, everyone, for the responses, and my apologies if I came off defensive. I do plan on putting together the living will, beneficiary-type paperwork. My main question was about to lease or not to lease, and I think I'm leaning toward drafting up some kind of lease for the first year.

I was pretty sure that leases and utilities weren't reported to credit bureaus, but I know that in applying for a lease, etc. having a good leasing/mortgage history can come into play.

Thanks again, everyone.

[disneysteve]

I know that in applying for a lease, etc. having a good leasing/mortgage history can come into play.

That's true. Some landlords will run a credit check on potential renters. Not all do but many do. That doesn't mean, however, that they then report anything to the credit bureaus.

[mike95910]

Yeah not all will run credit check but i have seen many ask for proof of income and if you dont make over 4 times the rent amount then no go.

[disneysteve]

Yeah not all will run credit check but i have seen many ask for proof of income and if you dont make over 4 times the rent amount then no go.

That's great. I wish all would do that. It would prevent so many problems with people getting into places that they can't really afford. Same goes for mortgages. So much of the housing mess would have not happened if lenders would have enforced a 28% debt to income ratio.

[jpg7n16]

If you're truly hoping to work this like a life partner situation, you'll need to speak to an estate attorney in your area about creating a will. And you'll need to pay special attention to beneficiary designations on life insurance policies, bank accounts, etc.

I know that's a bit off topic, but it's pretty relevant to your situation.

And as pointed out above, lease vs mortgage affects your credit completely different. Lease shouldn't be a big deal. Mortgage and asset titling could be a big deal. So if you're leasing, nothing to worry about. If you're buying, speak to an attorney in your area about the best way to set up the arrangement.