Buying a House Before Marriage_ What You Need to Know

CONSIDERATIONS BEFORE
BUYING AS AN UNMARRIED
COUPLE
SOURCES:
https://www.maxrealestateexposure.com/buying-house-before-
marriage/
https://artesiantitle.com/

Current Finances
You and your partner need be completely clear about both of your financial situations.
You are about to make a major purchase together, and like any business transaction,
you need to know that your partner is capable of holding up his or her end of the
bargain.
You and your partner need to share current, up-to-date information about your credit
score, debt, income, and other financial obligations. All of this information is going to
be required for getting a mortgage anyway, so it will all come out into the open before
you can purchase the home.
One very important thing couples purchasing before marriage need to understand is
debt obligations. When you both co-sign a mortgage together, each party is
responsible for the complete debt. What does this mean in the real world? If you and
your partner split and he or she decide not to pay the mortgage, you’ll be held
responsible.
If things go sour, this can put you in a terrible spot. For this reason, many financial
planners recommend not to buy a home for more than one person’s salary. If there is a
breakup, you would still be able to afford the mortgage even if only for a short time.
Again, this is where discussing finances before purchasing becomes very important.
Credit Scores
Tips for buying a home before marriageYour credit score and the score of your partner
is a significant factor in your ability to get a mortgage. A higher credit score tends to
ensure a better mortgage rate, which can save you tens of thousands of dollars over the
life of the loan. Before you buy, you want to know exactly what both of your credit
scores are.
As a married couple, your scores could be lumped together, but as an unmarried
couple, they can be considered separately if necessary. You have the option of having
the person with the better score apply for the mortgage, thus avoiding the drag of the
lower credit score on the loan terms.
But keep in mind that when the person with the better score takes out the loan, it is
only his or her income that is taken into account for the home purchase. The single
income will need to be enough to pay the mortgage – which may or may not be a
problem in your circumstances.
Remember credit scores play a significant role in getting the lowest mortgage interest
rates. Make sure you analyze your current credit and try to improve your score before
purchasing. Increasing your credit score could save you thousands of dollars over the
life of the loan.
The three major credit reporting agencies are required to give one free credit report a
year. As long as you haven’t requested a free report in the past year, you can go online
and download your three free reports. You can go to the Annual credit report to get all
three.

Future Finances
Money problems are one of the leading causes of relationship troubles, for married or
unmarried couples. And few purchases can lead to money problems more easily than
buying a home. You and your partner need to draft an agreement – on paper – that lays
out who will pay for what, and how much. These include:
Down Payment
One of you may have a lot more money to put towards the down payment. Or you may
put in equal amounts. However, you arrange the down payment, be clear about who is
putting down how much, and what that means over the long-term – such as if you sell,
or break up.
Mortgage Payments
How much will each of you pay toward the mortgage? Plenty of couples have unequal
mortgage payment arrangements due to differences in income, but again, you need to
discuss what that means concerning each of your equity over time. Not talking about
financial issues like these can cause unwanted stress down the road.
Fees
There are a lot of other costs that come up beside the mortgage payment. For example,
you may need to pay homeowners association fees. Depending on your down payment,
you might need to pay mortgage insurance. Property taxes are another fee that can be
pretty substantial in specific areas. Here are some additional expenses when buying a
house you may not have given much thought to.
All of these items should be factored into your budget when buying a home, especially
when you are not married.
Maintenance
One of the most significant costs of home ownership that new owners are not prepared
for is maintenance and repairs. The water heater breaks, the stove stops working, the
fridge goes out – you need money to pay for these things when they happen. Will both
of you cover the costs equally? If not how will these kinds of expenses be divided?
Upgrades
Upgrades may come a few years down the line, but when they do, you want to know
who will pay for them. Not long ago, I had unmarried clients who purchased a home in
Southborough Massachusetts. It was clear to me they were not on the same page when
it came their purchase. One of the parties was already planning the improvements,
while the other was without question putting up a big STOP sign.