Buying a home together before marriage or after: factors to consider

Bankrate

While there is no right or wrong choice when deciding to buy a home before or after marriage, there are certainly a number factors to consider when making this big financial decision together. Sarah Berger of Bankrate, shares three factors to consider when deciding when to buy a home with your significant other. 

More couples buying homes after marriage

Molly Phillips married her husband, Graham Phillips, in 2013, but the couple did not purchase a home together until a year later. They took their time in making the decision, considering all the pros and cons of renting versus buying.

“The main reason we chose to buy when we did was thinking about the future and where our money will be,” says Molly Phillips. “When you buy a home, even if you’re incredibly in debt, you’re making payments towards your investment. It would have been incredibly hard to save as much as we would have wanted in addition to paying rent. This way, at least we are putting our money directly towards something that will benefit us in the long run.”

Banks typically underwrite each individual on the application, whether or not the applicants are married.

Marriage status doesn’t affect mortgage rates

So, when is the smartest time to buy a home? Before or after marriage? There isn’t one right answer, according to Rodriguez. He emphasizes that every situation is different, but whether or not the 2 people buying a home together are legally wed doesn’t make a difference when determining the loan amount they would qualify for and the interest rate. Banks typically underwrite each individual on the application, whether or not the applicants are married.

Whether or not you have a ring on your finger might not affect your ability to buy a home, but your spouse’s credit score will. A lender typically takes both credit scores into consideration when determining the loan value and interest rate, so it’s important to understand your partner’s financial situation when deciding whether to purchase a home together. If 2 people are on the loan — and each person has 3 credit scores — Rodriguez says they use the middle score for each person. Out of those 2 scores, they use the lower score.

A tough decision takes time

Be sure to take your time when making this major life decision. If you get divorced and are both on the mortgage, things could get messy. It might not be romantic to think about the real-life consequences of what might happen if things take a turn for the worse while newly engaged, but it’s realistic and necessary. If you get divorced while both on the mortgage, what exactly happens next varies from state to state, according to Rodriguez.

“If you both are on the mortgage and have to make mortgage payments, one person would have to buy the other person out, which would be a large financial obligation,” says Rodriguez. “You have to look at worst-case scenarios. Sometimes it’s uncomfortable.”

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