Factors To Consider When Purchasing a Home as an Unmarried Couple
While exciting, real estate purchases can present challenges for unmarried couples. And since buying a home is a significant financial investment, it's best to prepare for those challenges before committing to the purchase.
What To Consider When Buying Property as an Unmarried Couple
Have an Open Discussion About Finances
Even if you're a couple that has lived in a rented apartment together already and are reasonably familiar with your partner's spending and saving habits, it's crucial to have a formal dialogue about finances.
Go over everything from credit card debt and school loans to car payments and other obligations. Do you still owe your folks for that personal loan? Make sure you mention that too.
FICO scores, income, and savings are other items you should cover during your financial discussion.
Remember, when you begin the home loan application, everything will be revealed anyway, so you might as well be honest from the get-go.
This would also be a good time to work out to improve finances before applying. For example, if it turns out one or both have low credit scores, discuss how to raise the scores before applying for a home loan. Likewise, if one has low savings, work together to increase it to have a more substantial down payment.
Here are other items you should discuss when buying a home as an unmarried couple...
Decide How the Monthly Mortgage Will be Split
If you've already lived together in a rented apartment, you may have already worked out who pays what. But a mortgage can change that. The first way it changes things is that you have to determine how to split the down payment and closing costs.
There's also the question of emergency house repairs and ongoing maintenance. How will those costs be split?
Some find it helpful to have a joint bank account for home-related expenses while keeping their other funds in a separate account.
Some couples also enlist the help of a real estate attorney to keep things in order and ensure each partner holds up to their homeownership responsibility.
Explore Homebuying Options
Be aware that a mortgage and title are two different things! Sharing the home loan does not automatically mean that each partner is also on the title --remember, the title indicates ownership. Laws vary by state, but typically there are three options regarding the title.
Joint Tenancy means that both partners share ownership equally. So in the case of death, the surviving partner will inherit the other's stake and own the entire property.
Tenancy In Common says that each partner owns a percentage of the property. In the case of death, the specified percentage of ownership would not go to the surviving partner. Instead, it's transferred to whoever is specified in a living will or trust. Without will or trust, it goes to the next of kin.
Sole Owner means that only one partner owns the home. This makes sense if only one person is on the mortgage. However, be aware that if you're paying towards the mortgage but aren't listed on the title, you won't reap any of the benefits of homeownership.
Consider Your Personal Goals
Where will you be in 3-5 years? Think you'll move for a job opportunity? Do you see yourself having kids soon? Big changes like these can alter everything about your life, so they should be part of your decision-making when buying a home.
What Happens Should You Split Up?
Unfortunately, sometimes things don't work out as a couple, and owning a home together presents some challenges.
Again, you may want to work with a real estate attorney to help draw up a partnership agreement that details what happens to the home should you break up.
Remember, there are no legal protections for unmarried couples regarding real estate.
We look forward to serving your home buying needs! Whether a married or unmarried couple, the home buying process begins with pre-approval. Apply securely and quickly using our online application, and contact our office for live assistance.
Leader Funding, Inc. strives to ensure that its services are accessible to people with disabilities. Leader Funding, Inc. has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Accessibility on Leader Funding, Inc. website
Leader Funding, Inc. makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows leaderfunding.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Enabling the Accessibility Menu
Leader Funding, Inc. accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Leader Funding, Inc. continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Leader Funding, Inc. website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
Here For You
If you are experiencing difficulty with any content on Leader Funding, Inc. website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: Info@leaderfunding.com