You are 100% invested in a fully committed relationship but running to the alter to say “I-DO” just isn’t the step you and your partner feel a burning desire to jump into.
I totally get it!
Sometime when things are going so perfect, the need to confuse the issue with a big ceremony and a name change just seems a bit daunting.
However, you and your significant other are smart about your finances, and you want to make sure that when the day for marriage comes, that you have taken all of the best possible steps towards securing a financially stable platform to take your “big leap” from.
So, let’s talk about housing for a bit…
You have an apartment or rental, your other half has a place to call home, BUT you spend every night together, and the combined expense of your respective rentals probably far outweighs what the mortgage payment on a really nice home would cost right?!? So instead of shopping for a sparkling new stone, you decide that an equally precious and shiny new object to look for would be a set of keys for your new “together home!”
Let me start by saying, you wouldn’t be alone! According to an annual report published each year by the National Association of Realtors®, in 2017, 16% of first-time homebuyers were unmarried couples. Jessica Lautz, managing director of survey research and communication for NAR, was quoted as saying that 2017’s numbers represent “the highest share (of unmarried buyers) the organization has recorded since 1981.” Some of the most compelling justifications motivating the decision to buy before marriage is our still-low mortgage rate environment, the ability to build equity, and the rising rental costs of many areas. Adding these factors to the fact that nearly 100% of your time is spent together but you’re paying for separate places makes buying a house now, rather than delaying home ownership, make sense for many unmarried couples. However, the decision to buy as an unmarried couple does require some basic planning and understanding, an awkward conversation or two, and finally, an agent who can help answer the specific questions that unmarried couples need to be advised on to address the “next steps” in the event the relationship doesn’t last.
STEP 1. You need to determine if just one (or both of you) will be “officially” buying the home. While I know this doesn’t probably feel much like “buying a home together”, it really has nothing to do with feelings, and everything to do with financial planning. Many married couples find that using the income, assets, and debits of only one spouse often provides more than enough room to qualify for the home of their dreams, and to be totally honest, the mortgage documents have NOTHING to do with legal ownership and simply show WHO is responsible for the debt.
STEP 2. Understand that HOW you take title to a piece of real estate makes a big difference when taking title as an unmarried couple. While these rules do vary from state to state, the main thing to determine is how each partners interest in the home is to be handled in the event of a break-up (or even worse, death). If title is taken as an individual (as in the case laid out in Step 1 where only one person officially buys the home) then things are pretty cut and dry…that person holds the debt and the title, and therefore; legally owns the home. However, there are several other ways to take title, regardless of how your mortgage is structured. Examples include, an even 50/50 share of ownership, an uneven share of ownership (i.e. 75/25), and certain title options even allow for the partners interest in the real estate to be “willed” to someone other than remaining partner in the event of death. All of these options have their place and purpose, but ONLY you and your significant other can determine which option is best for you, and your unique situation. A final note on title is that as your situation changes (i.e. you get married), you can change the way your title is vested with a simple quit-claim deed at nearly anytime, and I encourage you to keep the vesting in line with your current needs.
STEP 3. TALK TO ONE ANOTHER!!! While I am certain that conversations about how things are to be handled in the event of a break up will be awkward, and possibly even tense, I can assure you that having the conversation BEFOREHAND will be less awkward or tense than trying to have it AFTER a relationship has fractured. Consult professionals such as Realtors®, Mortgage Lenders, Attorneys, and CPA’s to guide you in your options based upon the equitable investment each of you are making into the transaction. The most important thing to keep in mind as these discussions are moving forward is to ALWAYS be open and honest with each other, and don’t make any agreement you feel pressured into. Once you have the outline of your plan, reduce it to writing, and have it notarized. Think of it as a “Prenuptial” for your home! Again…it may not be sexy, but it is financially savvy and a great protection for both of you moving forward. Oh yeah…make sure your homes “Prenuptial” includes a marriage provision that terminates the agreement upon taking your vows. Remember, this isn’t about taking advantage of someone you love, it’s about protecting your individual interest while NOT married. Once you say “I-DO” the interest should no longer be about “self-preservation” and much more focused on building a life and financial future together!
STEP 4. KEEP PARENTS (AND FRIENDS) ON THIS SIDELINE FOR THIS ONE! So, I know I probably just angered some parents with that recommendation, but I too am a parent, I and know firsthand what over-zealous parental involvement can do to muddy the waters! As parents, the number one job we believe we have concerning our children is their protection and welfare. This overwhelming desire to protect our children, sometimes blinds us against being able to maintain a fair and impartial opinion. Look, you are an independent, free thinking adult (at least you should be if you are thinking of purchasing a home with your unmarried partner) and you are capable of making your own decisions in life. As a parent, it is not my place to meddle in the financial agreements my children have with their significant others. They need to work through these matters as adults, and seek counsel in non-biased, third party professionals that don’t take a slanted view of what is fair and equitable.
Buying a home is an exciting adventure! Choosing to do it while single, married, or in a committed, non-marital relationship is nothing more than a single step in the process. Enlist the services of a professional Realtor® to assist with your transaction and make certain you ask them a few qualifying questions to ensure they too best know how to guide you in your specific situation. Use some common sense, maintain an open line of communication with your partner, and summarize all of the details into a basic agreement that protects all parties!
Should you have any questions about buying while unmarried (or ANY real estate related questions), I would be more than happy to help! I have been involved in the real estate and mortgage industry for over 25 years, and I am always willing to share my experience to help others!
Feel free to reach out via any of the contact options available through this site!