Love is blind, but don’t let it blind you. Don’t do business with friends. There are plenty of clichés that say otherwise, but buying and financing a house with a person you aren’t married to could be your answer to home ownership. Here are few critical things to think about before buying a home with a partner who is not your spouse.
Married couples enjoy some inherent protections under the law in case of death, divorce or other unforeseen personal tragedies. These protections and advantages include property transfers, divisions of equity and the ability to file a joint tax return to ensure both parties reap the benefits of the mortgage deduction come April 15th. Unmarried couples, friends or business partners are afforded none of these basic protections and benefits.
If you’re not married, don’t fret. Unmarried people, whether they are domestic partners, old friends or business associates, are coming together more and more to take advantage of a very pliable real estate market. However, before you and your partner jump headlong into the maw of financial partnership and buy a home together, here are a few things you should consider before signing on the dotted line.
Get it in Writing
Nobody likes to discuss the financial pitfalls and potential failures of any relationship, be it personal, romantic or even professional. That said, if you and your partner are serious about buying a house together, put everything you agree upon in writing.
Remember, after all the vows, the I dos and the cooing over the lovely new bride, a marriage is, at its core, a legal contract. Watch this and listen closely:
Who Gets the Tax Break?
The short answer is, both of you. Even if you’re not hitched and cannot file taxes jointly, homeowners are entitled to the mortgage interest tax deduction. The process isn’t that complicated and you should take the time to understand how to get the break on your taxes.
Credit is the Key When Buying a Home
If both names are going to be on the loan, it is imperative that each individual knows what kind of credit they have and how they can improve it if needed. You may want to agree to share this information with each other before considering purchasing a home together. It’s hard to ask this of someone you care about, but even harder to make a mortgage payment on your own because your partner has terrible credit and doesn’t know it.
Quizzle.com is the place to get a complete understanding of your credit report and score and take specific action to improve your financial health.
This article is part of the Go Banking Rates Financial Literacy Movement, helping Americans get smarter and grow richer. Take our mortgage quiz to test how knowledgeable you are!