Getting married and buying a home are two of the biggest decisions you’ll make in your life - and usually in that order. Yet more and more millennials are opting to buy a home with their significant other before tying the knot. While many couples are smart to take advantage of historically low mortgage rates, buying a house as an unmarried couple can be a complicated financial transaction. So if you’re considering purchasing a place to call home before popping the question, here are three things to take into consideration:
- Check that you both have good credit scores and cash flow. Do you know your sweetheart’s credit score? You may want to ask before signing on the dotted line of a mortgage application. Both parties that are applying for the mortgage must have a qualifying credit score and income in order to be approved for the loan. Be sure you both not only discuss your creditworthiness, but your future career plans and any immediate decisions to change jobs as well, since this could also impact your mortgage qualification process.
- Decide on how you want to jointly hold the house title. You have several choices for how you want to structure co-ownership of your new property, some of which are perfectly suited for unmarried couples. A joint tenancy, for example, provides a right of survivorship to both owners, ensuring that your loved one would inherit the property in the event of your death. If you’re not sure which structure is best for you, consult your realtor or an attorney.
- Create a legal agreement in case you break up. If you’re buying a house with a significant other, you’re obviously in a very serious, committed relationship. But regardless of how sure you are of your relationship now, the unexpected can happen. It’s important to have a legally-binding plan in place in case you decide to split up and the house needs to be sold. Since no strict regulations govern the treatment of property when non-married couples separate, it’s all the more important to consider creating a legal agreement to protect you and your loved one’s rights. Speak with an attorney to help you draft an agreement that outlines the responsibility for payments and different scenarios, such as what should happen if one of you wants to move out.