Betrothed or not, co-buyers should be careful when taking title to a new home

DEAR MR. MYERS: My boyfriend and I are planning to get married next June, but we signed an offer to buy a house together two weeks ago, and our offer was accepted. Now the representative who is handling the deal’s closing wants to know whether we want to take ownership of the home as joint tenants or tenants-in-common. What would be best?

ANSWER: Most married couples who buy a house choose to take title as joint tenants, which usually means that the spouse who dies first will automatically leave his or her entire interest in the home to the survivor. The survivor can then do whatever he or she wants with the property, whether keep it, sell it or leave it to any other person upon death.

It’s usually best, though, for unmarried buyers – whether they are star-crossed lovers or dispassionate co-investors – to take title to the home as tenants-in-common.

A tenants-in-common arrangement, commonly known as “TIC,” would allow you to sell or will your interest in the home to whomever you wish. That’s a particularly important consideration if you have a child from a previous marriage and want to ensure that your kid, not your future spouse, would eventually inherit your estate.

Pardon me if I seem unromantic, but taking title to the home as tenants-in-common rather than joint tenants could provide another benefit: Should you break the engagement before the planned wedding day, your TIC ownership would make it much easier to buy your fiancee’s interest in the house or to sell your stake to an unrelated investor.

REAL ESTATE TRIVIA: Arizona and Hawaii are the only two states that don’t observe the federal government’s suggested Daylight Saving Time rules, which require other Americans to set their clocks one hour forward in the spring and set them back one hour in the fall. DST was established in the United States in 1918 to save electricity and to preserve oil and fuel needed by the military during World War I.

DEAR MR. MYERS: If I make a full-price offer to buy a house, is the seller legally required to accept it?

ANSWER: Generally, no. It’s the owner’s right to accept or reject an offer, even if the buyer is willing to pay more than the seller originally asked.

DEAR MR. MYERS: I am a veteran of the U.S. Air Force. I purchased my home with a mortgage guaranteed by the Veterans Administration in 2014, then refinanced when interest rates dropped earlier this year. Now I’m getting bombarded (sorry, Dave, that’s “Air Force humor”) with phone calls and letters urging me to refinance again. Most of the sales pitches say that I can get a new VA loan, and maybe even get cash for my equity, without paying any of the usual refinancing costs. Are these offers legit?

ANSWER: Some are, but others might not be. Complaints filed by vets about aggressive or misleading marketing tactics engineered by lenders have soared to the point where the U.S. Department of Veterans Affairs and a related agency, Ginnie Mae, announced the creation of a joint task force in late October to investigate such alleged abuses.

It’s sad that at a time when we should be celebrating the brave men and women who have served our country, as Veterans Day approaches, there apparently is a growing number of lenders hoping to bilk them instead.

The VA and the federal Consumer Financial Protection Bureau say they have received complaints from thousands of veterans about relentless calls from lenders and mortgage brokers that urge the vets to refinance, even if they have done so in the past few months. A common sales pitch is that the new loan would carry an interest rate as low as 2.25 percent and won’t require the vet to pay any out-of-pocket cash.

There is one, and often two, big catches to these proposals. The first is that the bargain-basement interest rate that’s offered usually is variable, which could allow it to skyrocket in the months or years ahead. The other is that, although there may be little or no out-of-pocket costs to refinance, hefty fees may be tacked on to the outstanding balance of the mortgage – sometimes so high that the loan becomes more than the house is worth.

Not surprisingly, telemarketers and others who are touting these loans aren’t forthcoming with such negative information.

Ginnie Mae, the VA’s partner in the new task force, doesn’t make loans directly to consumers. Instead, the agency purchases government-backed mortgages from lenders, pools them with other loans that it buys, and then sells shares in the pools to investors. This process helps to ensure that money will be available to future buyers and mortgage refinancers.

Officials leading the task force are already collecting information about fraudulent or misleading loan practices, and vow to refer the names of the most egregious offenders to the Consumer Financial Protection Bureau and similar regulatory agencies. Those agencies, in turn, can file huge lawsuits against unscrupulous lenders in federal court and even yank their ability to make VA loans in the future.

In the meantime, officials are urging veterans to view any refinance offers they receive with a healthy amount of skepticism. Though legitimate offers can be a money-saving godsend for vets, the devil is always in the details of a new mortgage contract.

David W. Myers’ column is distributed by Cowles Syndicate Inc.