Statistics for 2017 shows that among first-time home buyers almost 16 percent were an unmarried couple, the report was generated by the National Association of Realtor. It also indicates that this is the highest share recorded since 1981 although, in fact, all people know that love and marriage usually don’t go together.
Remember if you both are committed about your relation and plan for marriage is far enough, then buying your dream home must not be too far.
But people typically ignore all types of risks associated with buying a home as an unmarried couple. But with few precautions and planning along with a good lawyer, you can avoid many things.
Using prenuptial agreement for buying home
According to a famous real-estate attorney recommends that all unmarried couple must create a co-ownership agreement by consulting a professional while you are planning to do things up. Although no couple even wants to think of breaking-up things happen in real-life and one should take that into account.
Prenuptial contract will ask some questions and then agreed on a solution for each given situation. Like, what happens to the property if you separate? What if anyone dies of any other unexpected event happens like disability. Who will pay for maintenance, repairs or even utility bills?
Opt for the right type of title
Owning a home can be done under different titles and selecting the best option can be tricky for one who doesn’t know about that before. This is especially a point of consideration for unmarried couples, although options vary from state to state but here are some common;
Joint tenancy: In this, each partner is equally getting i.e. 50% of the property. If one of them dies, the other one becomes the owner of the whole tenancy contract or say property.
- Pro: In such a contract, one must not worry about fighting estates or relatives for the house in the event of death from any side of the contract.
- Con: Breaking up in such a scenario can be troublesome, more specifically when a partner is either unable or not willing to buy-out other’s share.
Sole Ownership: Here only one person gets the ownership of the property and has all the respective rights and responsibilities also.
- Pros: This type of contract can simply yield tax savings, especially if the incomes are drastically different. If the sole owner has bad credit and you apply for a mortgage and got an approval. Remember that ownership rights are determined by names on the deed, not by names on the mortgage.
- Cons: If separation occurs and you are not on title, then you will have to walk away with nothing in your hand even if you made any expenses on maintenance or even mortgage.
Tenants in common: This option allows unequal ownership with agreed percentage, let’s say if you own 75 percent then your partner will hold remaining 25 percent stake.
- Pro: You can agree and match your ownership stake according to the financial contribution in buying home.
- Con: On the other side, if one partner dies then this doesn’t transfer his/her rights to the living partner unless otherwise stated in a will by dying partner.
Another important thing to consider here is that if any time in your life, anything changes then you must revise the deed and it must reflect the legal status.
Don’t involve your parents in the process
It’s seen very commonly that young unmarried couple involves parents in the home buying decisions as the decision is stressful so couples want to shift responsibility.
Although, parents have much more life experience due to unawareness about the level of the relationship among couple such decision typically causes a bit more emotional aspect when parents look at home.
In fact, parents may mean well, but you must keep that in mind that it’s your house and the decision must also be solely yours.