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QUESTION:

I sold my house for $380,000 and have $250,000 cash left from it.  Now I am looking for another house.  I am living with my boyfriend and sharing rent with him and his son.  My share is $825 a month for rent.    He is on disability and cannot own a house, so I will buy a house.  I was going to buy one anyway.  We are not going to get married.   I just need to know if I should buy for something over $250,000?  I am collecting social security and would like to have something with no mortgage, just taxes and utilities.  He is encouraging me to buy something that costs $300,000 and I am worried about getting a $50,000 mortgage at this time in my life.  I am 65.  Thank you for any help or suggestions.
A Mortgage Now?

ASK YOUR MONEY'S ROSEMARIE BOYD ANSWERS:

Dear "A Mortgage Now:"

Your gut instincts are right on!  Do not pay more for a house then you feel comfortably affording completely on your own.  I like your logic of no mortgage at this point.  It makes a lot of sense!  You are also correct in thinking that the house should be in your name only.  This way you are protected should the relationship end, or should he be sued for some strange reason.  Other things to consider:

1.        Make sure you add a Homestead protector to your home (if you reside in MA).  This protects the first $500,000 of equity in case of a law suit.  If you go to www.sec.state.ma.us/rod/rodhom/homidx.htm, you will be able to download the form.  Once you complete the form, file it at the Registry of Deeds at your courthouse.

2.       Are you going to ask your boyfriend to share home expenses?  One possibility is to have an agreement making him responsible for payment of the property taxes or the utilities. 

3.       Since you are not married, I suggest that you make sure you have some sort of plan should the relationship end.  I know this is not a pleasant thought, but it is reality.  In your case it is even more important because he is disabled and you don’t want problems should you wish to end this relationship.  This plan should include some exit strategy in dealing with the son should your boyfriend die.  Things should be written down and notarized.

4.       If Social Security is all you have, you are, once again, correct.  A mortgage would be difficult to fit into that budget.  Also, a mortgage under 100K might not be possible.  Banks don’t like small mortgages.

5.       Emergency Reserves.  If you can, hold on to the some cash for this purpose.  Depending on your lifestyle, between 10K and 20K would be good.

Thanks for your question.  Rosemarie Boyd, CFP 

grammanancycate When I read this post ALARM BELLS went off in my head!!! Immediately I was screaming NOoooooooooooo! Don't do it!
Mon Oct 11, 2010, 12:51:31 PM EDT

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