Everyone knows there are risks involved when buying a home with another person- especially when you're not married. A new study by Coldwell Banker found that 25 percent of people aged 18-34 have purchased a house with their partner before getting married. If you're planning on doing the same, there are some things you need to consider first.
Right off the bat you'll need to have a money talk with your partner, married or not. Sometimes discussing money and spending can be uncomfortable but you'll both need to be honest about your financial situations and make sure your expectations are aligned not only in the relationship but with spending. Don't make assumptions your partner is on the same page as you with everything and make sure you have your agreements written in a contract. You should plan for every scenario and designate the bills if you're going in 50/50. This also means agreeing on mortgage expectations if both names are on it and the responsibility is equal.
You're also going to have to plan for what happens to the house if you split up. Will one buy out the other’s share? Will you sell it together and pay off the mortgage? Will one of you keep living there while the other rents out their room? These are questions that should be discussed ahead of time no matter how much you care about each other so that just in case, you won't have to make these important decisions when feelings are hurt and emotions get in the way.
Now we can discuss your ownership options- there are three for unmarried couples. Each option has its own pros and cons and you'll need to talk to your partner about which one makes the most sense for you both.
1. Joint Tenancy. This is an ownership where two owners share an equal stake in the home. This type of homeownership is beneficial because it ensures that both partners have the same rights to the property.
2. Tenants in Common. Tenants in common is a type of ownership where both people on the deed own a specified percentage of the home. This is a good option because it allows ownership to be designated according to how much each is paying into the house.
3. Sole Ownership. As it sounds, this type is where just one partner’s name is on the title. For mortgage purposes, this is a good option say if one person has poor credit or for tax reasons if one person’s income is much higher than the other’s. Just keep in mind that a mortgage isn’t the same as a deed but it's possible to add your partner to the deed even if they aren’t on the mortgage.
For more articles like this, keep up with our blog page.