Should You Buy a Home Together?

Here are some things you need to think about if you’re considering buying a home with your significant other.

One in four couples between the ages of 18 and 34 bought a house together before they were married, according to a study by Coldwell Banker Real Estate. But there are a lot of risks involved in purchasing a house with another person, especially one you’re not married to.

Here are some things you need to think about if you’re considering buying a home with your significant other.

Talk about Ownership

Before you enter into homeownership with another person, married or not, you need to have a brutally honest conversation about finances. Make sure your expectations are aligned, both for your relationship and your finances. Don’t make any assumptions and don’t move forward on the belief that everything will work itself out, no matter how much you love each other. 

There are three different ownership options for unmarried couples. Each type has its own pros and cons, and there’s no one-size-fits-all. Talk about your needs as a couple to figure out what makes the most sense for you.

Joint tenancy is one type of ownership where multiple owners share equal stake in the home. With a joint tenant title, if one owner dies, their share of the home is transferred to the other owner. This type of homeownership can be beneficial since it ensures that both partners have equal rights to the property.

Tenants in common is a type of ownership where each person on the deed owns a specified percentage of the home. This option allows ownership to be apportioned according to how much each person is paying into a home.

Sole ownership is the third type. This is where just one partner’s name is on the title of the home. For mortgage purposes, having one person on the title can seem attractive if one partner has poor credit or for tax purposes if one person’s income is significantly higher than the other’s. Note, that a mortgage isn’t the same as a deed, and you may be able to add your partner to the deed even if they aren’t on the mortgage (however, this may have tax implications).

Plan Appropriately 

Get every part of your agreement in a contract. Talk to a real estate lawyer and get all your agreed upon terms down. Plan for every scenario. Designate who’s going to be paying what bills, or if you plan on splitting everything 50/50. 

Plan for what happens to the house if you break up. Will one of you buy out the other’s share? Will you sell it together and pay off the mortgage? Will one of you remain living there while the other rents out their room? Don’t put off these questions. You don’t want to have to make this decision when feelings are hurt and emotions are running high.

Finally, agree on your expectations for the mortgage. If both of your names are on it, you’re both equally responsible for making payments. That means if one partner decides to skip town and stop paying, the other partner is responsible for making payments in full. Make sure you get it in writing what percentage of monthly payments you’re each responsible for.

Owning a home comes with a lot of new responsibilities and decisions to be made. Make sure you’re ready to take that on as a couple.

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