My clients sometimes ask me if it’s a good idea to buy a home before marriage.
I’ve been around long enough to remember when couples got married first, then bought a home.
Unmarried couples rarely bought homes together back then.
Fast forward to 2017 and things have changed!
It’s now more common for unmarried couples to live 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.
It’s now more common for unmarried couples to buy a home together before marriage.
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.
Put Everything In Writing
Hire an attorney and prepare a written agreement that covers all of the details and consequences if your relationship fails.
How Will You Qualify For The Loan?
You and your partner may (probably?) have unequal incomes and credit scores.
Those two factors can affect qualifying and your interest rate.
They can also cause one partner to not qualify for the loan.
Discuss your situation in detail with your lender and make sure you both understand and agree about how to structure your financing.
How Will You Pay For Housing Expenses?
Be sure to decide who will pay for specific housing expenses if the percentages of ownership are unequal.
Consider setting up a separate checking account to pay for planned, and unplanned, housing expenses.
How Will You Take Title?
Get some legal advice on the various ways you can take title to the property.
Consider the possibilities of the death of a partner, rights of survivorship, and other important legal issues.
You need to understand the differences between Joint Tenancy, Tenants In Common, and other options for taking title.
What If You Buy A Home Before Marriage And You Break Up?
Love doesn’t conquer all and couples do break up.
Will you sell the property?
Will one partner buy out the other partner?
What if one partner stops paying their share of the housing expenses?
What are the consequences if the property is lost through foreclosure?
How will you handle personal property that was jointly-purchased?
A couple of final thoughts . . .
Take Your Time
Calm down and think things through (including the positive and negative aspects) before you buy a home with your partner.
You don’t need to own a home to solidify your relationship!
There’s no need to rush into buying a home as part of a relationship.
Plan your (mutual) exit strategy upfront; just in case things don’t work out.
Create A Will or Trust
Both partners should consider having a will or a trust.
A will or trust will allow an estate to be settled based upon pre-planned outcomes developed before the death of a partner.
Settling the estate of a partner lacking a will or trust will probably be determined by a judge.
That judge may render decisions creating outcome(s) you don’t like.
During his 44 years of full-time real estate experience, Phil has helped thousands of past clients buy and sell quality properties in the Western U.S.
Phil is one of only ten local Realtors® (of 5,500) honored with the coveted “Realtor® Emeritus” award from the National Association of Realtors®, recognizing 40 years in real estate.