Buying a Home Before Marriage

Evelyn Reyes

Millennials are ditching engagement rings and committing to each other by sharing a mortgage instead. Unlike their parents, millennials do not view marriage as a necessary step before buying a home together. Due to college debt, many millennials are putting off marriage and investing their savings into a home instead of a wedding. This move shows how different millennials are from previous generations and are prioritizing home ownership over marriage.

Step One: Have an open and transparent conversation

Congrats! You and your significant other have determined that you are both ready to take a big next step in the relationship and buy a home together. Now it is time to have an open and transparent conversation about your finances. It’s important to discuss income, credit card debt, student loans, savings, and any other finances in order to make a home buying game plan. Having this conversation early on will give both of you the opportunity to be open about any credit blemishes and get a hold of your finances prior to buying a home.

Step Two: Document an Agreement

Buying a home as an unmarried couple is not as simple as signing the standard real estate agreement. Buying a home, regardless of relationship status, is the single largest asset a person will purchase in their lifetime. It is crucial to have legal agreement documented that protects both you financially if things go south in the relationship.

This agreement often referred to as a home-buying prenuptial, helps address many questions including who is financially responsible for what and what were to happen if the relationship fails. Although no couple wants to talk about a potential break up, it is necessary to plan for the worst through a legal agreement now that you both still like each other. Failing to plan ahead could potentially leave you unprotected and will likely result in a messy and long legal battle.

Here are some questions your home-buying prenup should address:

  • Will you split the mortgage payment in half?
  • Who pays for the utilities and major repairs?
  • What happens if one of you becomes ill or dies?
  • What happens to the home if you later decide to split up?
  • If you decide to sell the home, how will the equity be divided?
  • Will the home be refinanced?  Etc.

Step Three: Pick a Title Wisely

When it comes to buying a home there’s no one title that fits all. Most married couples usually take the “Tenants by the Entirety”, on the other hand unmarried couples have to pick from: “Joint Tenants”, “Tenants in Common”, and sole ownership. Know your options and pick a title that works for both of you.

Tenants by Entirety: This title is only available for married couples and it gives both tenants 100% of ownership over the home.

Joint Tenants: This title allows each person to own 50% of the home. If one tenant passes away, their share automatically goes to the other tenant

Tenants in Common: This title allows unequal ownership of the home. For example, one tenant can own 60% of the property and while the other one owns 40%.

Bonus Tip: Don’t Involve Your Parents

Young unmarried couples often feel the urge to seek homebuying advice from mom and dad. However, homebuying is already complicated enough so why bring extra opinions into the equation.

Your parents’ generation did things more traditionally, so they might feel uncertain about the situation. Although, parents mean well it is your house so they only opinion that matters is yours. Just remember to be smart and get everything in writing.

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