Buy Now, Marry Later?
Purchasing a Home as an Unmarried Couple
More unmarried committed couples are forgoing the hefty price tag of wedding festivities in exchange for the potential investment of home buying. Last October, The National Association of Realtors ® published it’s annual Profile of Home Buyers and Sellers. The data reveals insights about household composition and its relationship to home purchasing behaviors.
About ten percent of new home purchases were made by unmarried couples. Those who’ve already said “I do” account for more than half of the new home purchase aggregate, followed by single women, with single men coming in as the minority.
Prime interest rates, among the lowest we’ve seen since the recession of 2008, in contrast with continuously rising rental costs, are appealing reasons to buy now, marry later. Read on for thoughtful tips on how best to navigate your home purchase as an unmarried couple.
Disclose Your Financial Situation
Before you speak with a realtor, talk candidly with your partner about each of your finances. Calculate your debt to income ratio, obtain a credit report and most of all, be 100% transparent.
Get A Prenup for Your Home
Married couples are entitled more legal protection than unmarried folks. Deciding to co-own the most expensive purchase you’ll likely ever make comes with certain risks. You could have a difficult time determining who gets what if the relationship dissolves. Protect yourself by signing a partnership agreement that outlines who is responsible for what and the applicable terms in the case that one of you isn’t meeting your obligations. Be clear about who is owed what if you decide to sell the home or end your partnership.
Know Your Rights
Taking ownership of a home is a hefty legal process. Hundreds of signatures are required throughout the process in order to title the home in your name, your partner’s name or both. If you choose to take sole ownership, you are 100% responsible for the mortgage, home maintenance and other liabilities. When you own as joint tenants, you accept equal responsibility and have equal ownership. If one of you dies, the other becomes the sole owner. Finally, you may choose to own the home as tenants in common, meaning you must outline who owns what percentage of the home.
Keep Accurate Records
Smart bookkeeping is essential in tracking the financial contributions made by each party. Receipt filing, expense tracking and routine reconciliation of these items is how to stay one step ahead. In the case of a home sale, ensure you’ve outlined your desire to be repaid costs before the proceeds are split.
Consult a Professional
Have a real estate attorney review your partnership agreement. Keep this agreement up to date as your relationship evolves.
Buying a home is often a huge milestone and joyous occasion for couples, married or not. Do you homework before you buy and protect yourself and your biggest investment.
Stay tuned for our next segment in this home purchasing relationship series. Happy home buying!