Buying a home together before or after your wedding is always an exciting time for couples. However, you need to understand the commitment of buying a home together, as this is where you will be living. While there are risks in buying a house with another person, especially when you’re not married, these are reduced if you fully understand the process and take a practical approach.
Should You Buy a Home Together?
When buying a home together, there are a few things to consider to maintain a smooth relationship when you have co-ownership of your home.
1. Be Practical
Before you enter into the legal commitment of buying a home with your partner, married or not, you need to have an honest and practical conversation about your finances. Discuss each other’s spending habits and credit score. Plan how you will split up the mortgage payments and what you will do if one of you can’t afford the payments. Put all the possible situations on the table.
2. Don’t Make any Assumptions
Buying a home together is a bigger commitment than being in a relationship. Avoid moving forward on the assumption that everything will work out. You must have a fully thought-out plan for making the payments. Don’t let possible problems go unaddressed as they may harm your relationship.
3. Make Arrangements
Undoubtedly, unmarried couples can be just as committed as married ones. However, it is always best to sit down with your partner and decide how you will manage if things go awry, for example, if you break up or don’t wish to continue living together. If you are not married, to avoid arguments that may make the situation worse, sign a no-nup, i.e. a cohabitation agreement. This makes it clear who owns what and how the joint assets will be allocated. We recommend that you get a real estate lawyer to help you.
4. Who Actually Owns the Property?
Here’s a quick explanation of the different types of ownership for unmarried couples:
Joint Tenancy : In a joint tenancy, multiple owners share an equal stake in the home.
Tenants in Common : Each person on the deed owns a specified percentage of the home.
Sole ownership : Just one partner’s name is on the title of the home. This type of ownership is used if one partner has poor credit or for tax purposes if one person’s income is significantly higher than the other’s.
Buying a home with your partner after or before your wedding can be incredibly worthwhile and is successful for most people. However, with such high risks, you need to be sure whether buying works for you, both as a couple and individually.
Now that you have an understanding of some of the issues involved in buying a home together and are ready to take that next big step with your partner, you may want to get expert advice from the experienced loan officers at Drew Mortgage Associates to get started!