Is it a good idea to buy a home before marriage?
I remember a time when couples got married first, then bought a home.
But, I’m older now and times have changed.
It has now become quite common for unmarried couples to buy a home together before marriage.
The 2010 U.S. Census reported that 7.5 million unmarried, opposite-sex couples were (gasp!) co-habiting, compared to 5.5 million in 2000, and 3.2 million in 1990.
A 2013 Coldwell Banker Real Estate survey revealed that 1 in 4 married millennials purchased a home together with their current spouse before marriage.
Unmarried partners considering buying a home should consider the following:
1) Put Everything In Writing
Have your attorney prepare a written agreement that covers all of the details and consequences if your relationship fails.
2) Get Pre-Approved For Your Financing
It’s likely that you and your partner may (probably?) have unequal incomes and credit scores.
Those two factors will affect qualifying and your interest rate.
Poor credit can cause one, or both, partners to not qualify for the loan.
Discuss your situation in detail with your lender.
Be certain that you both understand and agree on how to structure your financing.
3) Who Will Pay For Housing Expenses?
If your percentages of ownership are unequal, discuss and agree on who will pay for specific housing-related expenses.
It’s often a good idea to set up a separate checking account to pay for housing expenses.
4) How Will You Take Title?
How you take title to your home is a big deal!
Get some legal advice on the various ways you can take title to the property.
Learn how best to handle the possibilities of a partner’s death, rights of survivorship, and other important legal issues.
Take time to understand the differences between Joint Tenancy, Tenants In Common, and other options for taking title.
5) What If You Break Up?
Contrary to popular belief, love doesn’t conquer all and couples do break up.
Will you sell the home?
Will one partner buy out the other partner?
What if one partner stops paying their share of the housing expenses?
What are the tax and legal consequences if the property is lost through foreclosure?
Who will pay the mortgage payment until you sell the home?
6) Take Your Time
Slow down and think things through (pro and con) prior to buying a home before marriage.
You don’t need to own a home to solidify your relationship!
Buying a home before you marry will not necessarily strengthen your relationship.
Plan your (mutual) exit strategy in advance, just in case things don’t work out.