Now before you all get your panties in a bunch, I have nothing against people that are unmarried buying a house together. I mean, people do it all of the time in joint tenancy, partners, siblings, parents and children, and other people that have no intention of ever getting married. But for this purpose, I am talking about a couple, obviously dating, that are not married yet but plan on buying a house first. This also excludes anyone that is already engaged and planning to be married. If there are no plans to be married and you want to buy a house with someone you were dating, there are some dangers and some pitfalls, aside from the obvious, "what do we do with the house if we break up" situation.
It's important to note that about 16% of all first time home buyers are unmarried couples. And while that's all well and good, many couples don't understand how risky buying a home with an unmarried partner can actually be. Here are some of these risks and what to do about it.
#1. Have the awkward conversation of "what if".
Nobody ever thinks they're going to break up when they get together, but, with a 50% divorce rate, it may be inevitable. This is why you have to have the awkward and uncomfortable conversation about what will happen to the property if things go sideways. It's important to sign a prenup for the house, so to speak. Of course, nobody wants to talk about breaking up, but the agreement should be in writing, drawn up by a lawyer, and answer questions like what happens to the property should you break up, one person becomes disabled or passes away, and who pays for utility bills or other major repairs on the house. This is just a wise and mature way of looking at investing in a large purchase.
#2. Choose the right type of title.
There definitely are more ways than one to own a house. Consider the best type of ownership for your situation. Will you go with sole ownership, where only one name is recorded on the deed and that person has all the rights and responsibilities of ownership? Will you go with joint tenancy, where each person owns 50% of the property? The other option is tenants in common, which allows an unequal ownership, so one person could take 75% while the partner owns 25%. This might work in a situation where ownership shares the financial contributions. If one partner pays more for the down payment or makes more money, they may want to own more of the property.
#3. The mortgage will always be there.
Unless one party refinances or the property is sold, the mortgage will still be due from both of you. Just taking your name off the title isn't necessarily enough to close this section of your life. If you've cosigned on the loan you will still be responsible for the mortgage. Their credit limit, your credit score, and your future homeownership options are all wrapped up in this house, which you now own with someone you are not married to. That might sound scary but it is the reality and it's important to understand what will happen with the mortgage payment if things go awry.
This is not to say that things will dissolve but it is an important reality to face it just in case. Trust me, if nothing ever goes wrong, everything will turn out great! But if it doesn't, you'll have the precautions in place to protect you, your assets, the property, and your future financial stability.
As a certified Realtor® for the top-rated Columbus Realty Firm - Vision Realty, with 32 years of dedicated real estate experience, I can help buyers, sellers, investors, short sale sellers and more find, sell or invest in the right property, at the right price, at the right time. Contact me anytime for updates and information on the Columbus OH Real Estate market.