5 Steps Unmarried Couples Must Take Before Purchasing a Home Together
Written by
Adam Palasciano
Edited by
T. Woods
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Purchasing a home is one of life’s most special milestones. It can be even more special when you buy a home with the special person in your life. In many cases, people are doing just that but without getting married first.
The National Association of Realtors reported that unmarried couples account for 18% of all first-time homebuyers. This is up from just 4% in 1985, indicating a fourfold increase in unmarried homeownership over the past 40 years.
While this trend continues, there are five key factors you’ll want to consider if you’re an unmarried couple about to buy a home, according to Business Insider:
1. Discuss the Deed
There are three options when it comes to how to structure the deed: co-owners with rights of survivorship (meaning that one partner inherits the home if the other passes), co-owners as “tenants in common” (meaning that you both own a share of the home and have the right to pass that share onto other people) or keeping only one partner on the deed and mortgage (meaning that technically, only one person has a legal right to the home).
2. Recognize How Homeownership Outside of Marriage is Different
While a marriage legally entitles each spouse to a percentage of the home, there are no set-in-stone rules for unmarried couples. To add, your partner’s financial actions, such as missing a mortgage payment, could adversely affect your credit score if you’re both on the mortgage. This is where creating a cohabitation agreement becomes important.
3. Create a Cohabitation Agreement
This agreement serves as a sort of doctrine for all of the elements involving your homeownership together. It’s a legally-binding contract that outlines each partner’s financial obligations, what happens in the event one partner dies or you break up, and who owns the home among other factors. Creating and signing a cohabitation agreement before purchasing a home is key.
4. Be Completely Transparent About Your Finances
Laying out all of your finances on the table before purchasing a home together is of paramount importance. Discuss any debt you have, your credit score, your total savings, your monthly take-home pay, etc. Then discuss a monthly budget that includes the mortgage payment, utilities, insurance, property taxes and any other shared expenses. You’ll want to be sure that purchasing a home together is a financially sound decision for both of you.
5. Consider All the ‘What-Ifs’
“What-ifs” can include what happens if you break up, what if you decide to sell, how you cover the utilities and home repairs, how you handle financial hardship if one of you loses a job, and who owns what in the house including essentials like furniture and equipment.
Taking these five factors into account before making the plunge into unmarried homeownership can help ensure that everything goes smoothly on your home-owning journey.
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