Our lifestyles are pretty diverse. Depending on where you live and what you’re choosing out of life, you may be choosing a civil union, a domestic partnership or a common law marriage. Or, you may just be postponing the legal marriage. In fact, the Census reported in 2015 that the average age for a woman’s first marriage was 27, compared to the average age of just over 20 in 1960. We’re choosing our own paths now, and a lot of people don’t want to let delaying marriage (or not getting married at all) stop them from enjoying the benefits of buying a home and being certain that they are legally protected no matter what. Why should they?
Regardless of your legal relationship status, every relationship ends one of two ways: separation or death. With that in mind, I’m going to share some advice on things you can do to make sure everything goes as well as it can when, not if, your relationship ends. I’m talking about buying a house with a romantic, non-married partner. But we have other posts for you if you want to learn about buying a house with friends or without your spouse.
If you’re married when you’re buying a home, you inherently have many legal protections to ensure that you and your home are safe regardless of how the relationship ends. While unmarried partners are able to get many of the same protections that are afforded to married couples, the benefits don’t happen automatically. This means unmarried folks need to take a few more steps to make sure they’re legally protected. Before you sign on the dotted line, consider these tips.
Plan and Agree on Your Budget
This seems straightforward, but a lot of people miss this step. You and your partner need to decide who is going to pay for which expenses before you commit to a monthly mortgage payment.
Mindy Jensen, a licensed real estate agent in Colorado and community manager at BiggerPockets (a real estate social networking platform), says, “Consider your finances. Are you combining everything or keeping separate accounts? If you aren’t combining finances, think about opening a joint account for household expenses like utility bills, mortgage payments and repairs.”
Jensen says that even if you don’t combine finances, come to an agreement on who pays for what expenses or what percentage each of you will be paying on shared costs.
Decide Who Is Going To Be on the Loan and Title
Maybe your partner has a lot of student loan debt and not-so-great credit. Just like married couples, you and your partner can determine who of the two of you should be on the loan and title. But, as I mentioned before, married couples have more legal protections even if they’re not both on the mortgage or title.
Dana Eveland, a licensed real estate agent at RE/MAX United, says, “It’s important that [my clients] fully understand how the mortgage and the title work and who will own the property.” Your title and mortgage company can help you weigh the pros and cons of having one or both of you on the title or mortgage. Without any additional legal documents, the legal protections you’re afforded down the road depend on who is listed on your decisions here.
If you’re both going to be on the mortgage, make sure you’re both ready to put in the legwork when working with your banker. Eveland says, “Underwriters tend to need more details from unmarried buyers.” One of those details is consent to have your credit history checked. While married co-borrowers are able to approve a credit check on behalf of a spouse, unmarried co-borrowers must each provide this consent to the mortgage company.
Consider what you would want to happen to the property if one of you were to pass away.
- If, for example, you were to pass away and your partner is not on the mortgage or title, he may not be able to stay in the house and continue to pay the mortgage.
- If both of your names are on the mortgage and you were to pass away, the responsibility for the mortgage would automatically transfer to him; he can stay in the home and continue making payments.
- Or, if he isn’t on the mortgage but is on the title, or you leave the house to him in your will, he would be able to refinance the property into his own name or, potentially, assume the mortgage as a joint tenant.
If you want to learn more about this, read up on what happens to debts after someone passes.
Talk to Your Lawyer
There are a lot of things you can do to make sure you and your partner are afforded the same legal protections as married couples when the relationship has to end. Eveland advises her unmarried buyers to speak with their attorney(s) before signing up for anything, to ensure both partners know where they stand, what to expect and what their legal options are. Your lawyer can talk to you about all of your options, including a non-marital contract.
Since marriage is a legal contract between two people, it makes sense for unmarried couples making big commitments together (like a 30-year mortgage) to build a similar contract. Kind of like a prenuptial agreement, these contracts are intended to make sure you, your partner and your assets are all protected when the relationship ends. They’re sometimes called domestic partner agreements or cohabitation agreements, but it varies from state to state.
Your contract should include things such as how your assets (like the property) and income will be handled during the relationship, how they’ll be handled when the relationship ends and whether you’re combining ownership over any properties you already (or in the future will) hold individually.
This is more or less a long way to say that your contract should be used to detail who legally owns what, how your assets and income should be handled during the relationship and how these things should be split up down the road. Your non-marital contract will make your life easier when you and your partner separate and you need to make some changes to your living arrangement.
Do you have questions about buying a house with your partner? Have you done this already and have pieces of advice for others? Post them in the comments section below.
If you feel like you’re ready to buy a house with your partner now, talk to a Home Loan Expert about your options. Just share some information online, and we’ll give you a call.
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