3 things unmarried couples should do before buying a home

By Melissa Green | Citizens Staff

First comes love, and then comes…a mortgage? Yup, the survey says that 1 in 4 millennials bought a house together before marriage. In today’s economy, the choice to skip or postpone the nuptials makes a lot of sense for many young adults. With low mortgage rates and rising rent costs, buying a home may look like the smarter option.

But is it a good idea? Life happens and people break up — and when you’re unmarried, you don’t have the same legal protection as married couples. We spoke to real estate agent Lynda Le | Thread Real Estate, who says “With the right amount of planning, it can definitely work out…but if you don’t ask informed questions, you could be headed for trouble.”

Learn what three things Lynda says you should do if you are considering buying a house before marriage.

Talk about credit scores

As you’re considering buying a home with your partner, you should get used to having candid conversations about finances. If one of you has a low credit score, you could run into some problems during the approval process. According to Lynda, “Most lenders will consider the lower of the two scores when you apply for a mortgage, which means you may be offered higher interest rates.”  Paying a higher rate can equate to paying thousands more over the life of the loan. “Before you apply for a preapproval quote, get comfy, pull copies of your free credit reports, and make sure you’re on the same page,” says Lynda.

Hire a lawyer

If we’re being honest, our parents’ generation does make a valid point — buying a home can be risky for unmarried couples. “That’s where a good real estate lawyer comes in, to help alleviate the risk,” says Lynda. “I always recommend hiring a lawyer before the closing, while both parties are happy with each other. You have to protect yourself, and once a couple breaks up, the gloves come off — trust me!”

An attorney will be instrumental in helping you choose the right title for ownership, ironing out an exit strategy, and any what-ifs that need to be included. You’re basically setting up a prenup for your home — which isn’t the most romantic thing you’ll ever do with your partner, but it’s important.

Choose the right ownership title

When it comes to buying a house, there are a few different ways you can approach ownership status. Options vary from state to state, but normally include:

• Sole ownership: Only one name is on the deed, and that person has all the rights and responsibilities of ownership.
• Joint tenancy: Each person owns 50% of the property. If a tenant dies, their share automatically transfers to the other joint tenant.
• Tenants in common: Allows unequal ownership, so you could own a 75% stake while your partner owns 25%.  In this instance if one of the owners dies, their share will pass to their estate. This means having a will becomes very important.

“Each option comes with its own set of pros and cons, so this is a great opportunity to lean on the expertise of that lawyer I told you to hire,” advises Lynda “They’ll help you decide what the best options are for both of you.”

What to remember

Buying a home before marriage with your significant other is an exciting experience, but it’s important to stay levelheaded. “I don’t want to suck all the romance out of it,” says Lynda, “But I suggest approaching this purchase like a business transaction; your future self may thank you.” Have the hard or awkward conversations, be open, and enjoy your new home.

More information

Picking the right home mortgage is as important as choosing the right home. Our dedicated colleagues can help you find the right financing option for your unique situation. Click to learn more about our mortgage options or reach out to a Citizens loan officer.