Monica Gill
For married couples, buying a home together is one of the most exciting parts of married life. This apartment, condo, house or castle is where you will lay your head, take on the rewarding challenge of parenting, and start building your lives together. But, what about couples looking to buy before tying the knot?
Not all couples are waiting to get married before joining forces in the home buyers’ market. But, is this decision wise
There are many considerations to buying a home together when you’re only dating. Credit scores, relationship intentions, and what happens to the home if you break up are all topics that should be discussed.
Don’t make one of the biggest decisions of your romantic life without knowing the facts first. Here is everything you should know about buying a home together whether you’re just dating or are happily married.
1. Holding a Shared House Title Before Marriage
Buying a home together is a landmark event in a couple’s life. It used to be that you dated, got married, and then purchased your marital home together. Yet, according to a marriage and homebuying study done by Coldwell Banker Real Estate, a quarter of millennials are buying homes together before tying the knot.
While buying a home together before marriage will not affect your mortgage rates, there are still many important things you should be discussing together as a couple.
Will you share a bank account?
How much are you comfortable spending?
Who will pay for what?
These are just some of the topics you should discuss with your spouse before deciding to buy a house together.
2. Putting both names on the house
If you are planning on putting both names on the house and are unmarried, you may run into some issues. How you title your home will dictate what happens with the share of your home while you are alive and if you are deceased.
For example, say you sign a Joint Tenant with Rights of Survivorship. This means your property goes to the other homeowner on the title when you die – even if you have broken up! This also means that as parents, you lose the option of signing your property over to your child, parent, friends, or other family members if you die.
3. Discuss your finances
Sit down with your partner and have an open, honest conversation with one another. This may be awkward since studies show couples would rather reveal their true weight than discuss income and finances.
If you are getting ready to buy a home together, you will need to discuss your individual financial situations honestly with one another. Discuss how much you both make monthly, how you will budget, what you owe, what investments or assets you have, and whether or not you are currently in debt.
4. Talk about your long-term plan as a couple
This step is essential if you are an unmarried couple looking to buy. How long do you really see the relationship lasting? Couples who are raising children, parenting, and have already been together for a long time can feel more secure about buying a home together without being married.
If you are not committed to staying together for many years or feel yourself growing curious about someone besides your spouse, do not commit to buying a home together.
5. Take care of debts
If you want to get the best mortgage rates and loan opportunities as possible, you will both need to clean up your debts before you look into buying. One great way to take care of debts is to look into quick loans.
Quick loans or “payday loans” are designed to get you money fast for emergency situations. These loans are then meant to be paid off once you receive a paycheck from your employer.
Having a quick loan means that you will no longer owe a bunch of different debtors. Now you will only owe money to one source, which can save you money on interest charges.
In order to benefit from quick loans, you must learn to use them wisely. Quick loans should only be used by people who are employed, otherwise, debt can spiral out of control quickly.
6. What happens if you break up?
Buying a house together is a huge investment for any couple to make, especially unmarried ones.
What happens if you break up down the road?
Who gets to keep the house, if anyone?
How will the finances be split if the house is sold?
If one person moves out, what happens if the other can’t afford the pay the mortgage?
What will you do if one of you wants to sell but the other one doesn’t?
If you are parenting together, which parent will get to stay with the children in the home?
Both of you may claim that should a breakup occur you would be civil and fair about the home situation, but dividing assets is rarely easy post-divorce or breakup. Because of this, these are all important questions you need to answer before you consider buying a house together.
7. Marriage Makes things Easier
When it comes to buying a home together, it’s simply easier to do so when you are married.
There is no doubt that there are more tax advantages for married couples to buy a home together. For example, if a married couple sells their property, some of their gains will be tax-free.
As a married couple, you can deduct the cost of an annual loan interest (up to $1 million) from your taxes. This was introduced by the IRS to make home ownership debt seem less daunting. This makes it more affordable and convenient for married couples to get tax breaks after buying a home together.
Married couples can also deduct premiums from their mortgage insurance up to double the limit of a “single” homeowner.
Buying a home as a married couple also allows you to have more peace and security in your life. That’s not to say that married couples don’t break up, but their marriage shows more of a commitment to working things out.
Whether you’re purchasing as married partners or as a dating couple, there are many factors to consider. Sit down together and be honest about your finances, quick loans, bank loans, what you can afford, and where you see yourselves in the future. Doing so will help make your decision to buy that much easier.
