Instead of buying an engagement ring, many of today’s committed couples are investing in new homes. Mortgage rates are still relatively low, and couples can build equity and deduct interest from their taxes. When some areas’ high rental costs are considered, homeownership makes sense for unmarried couples who follow the tips below.
Think Carefully Before Proceeding
Married couples have many laws to protect them during a dissolution or divorce. However, laws are less clear for unmarried partners. For these reasons, it may be beneficial to consult a real estate agent or get new details here on mortgages.
Be Open and Honest
Before buying a home with a partner, there should be full disclosure of both parties’ financial histories. It’s the right time to be honest about credit mistakes that could prevent the couple from getting a good rate on a mortgage.
Get a Home Prenup
Many couples believe a standard purchase agreement is all that’s needed to buy a home. However, that’s not the case. A home prenup or partnership agreement outlines issues such as financial contributions, mortgage payments and what may happen during a divorce or a home sale. A home is most people’s biggest asset and debt, and it’s important to have a binding agreement that protects both sides’ finances in the event of a divorce.
Understand Ownership Options
Many couples want to enter home ownership together, but they should weigh their options before proceeding. Partners have three title choices: sole ownership, joint tenancy or in-common tenancy. The way a home is titled affects how it is transferred and taxed, and individuals should learn the state’s laws on home buying for unmarried couples. Consult a lender, real estate agent or attorney for additional advice.
A home can be a real joy and a shared asset, and in some cases, it can be a couple’s biggest burden. Whether or not a couple marries, a detailed home purchase and maintenance plan can help each person ensure that they’re protected throughout the union and the mortgage term. For more details or to learn about the mortgage lending process, consult a local lender or real estate agent today.