Looking to buy a home with your common-law partner or significant other outside of marriage? There are things you need to know before buying a house before you’re married. Homeownership is one of the biggest financial investments you will make in your lifetime. So, it should be treated with careful consideration when deciding. Here we break down five things you should know before buying a home with your partner:
The Law is Not Clear Cut
When a married couple purchases a home together, they have specific laws that outline their rights during and after ownership, as well as if they get divorced. For unmarried partners, the law is less clear-cut when it comes to breaking the co-ownership agreement.
Your Finances Need to be Evident
Before entering an agreement, you both should know every detail about each other’s financial situation. This includes all debts, the number of credit cards, credit rating, and previous financial history. This will become very important in the mortgage qualifying process as you will need to provide all the figures to the potential lender. And bad credit history could really affect the conditions of your loan, so understanding one another’s finances can help you to come up with a plan beforehand.
Adequately Review your Options
An unmarried couple will have three choices to choose from when purchasing a home. The first option is where one of the partners can hold the title as the sole owner, which is good for when one of you has bad credit history that would affect the purchase. Another choice is for both of you to hold title as joint tenants. If you want to own the property equally with rights to use the entire property, and in case of death, that property would be passed on to the other partner, then you will want to use this option. The last option is to hold title as a tenant in common, which involves deciding on a percentage of the property that each of you would hold. In case of death, the interest passes on to whomever is specified in the will, and if there is no will then the house will pass on to the next of kin.
Obtain a Co-Ownership Agreement
To protect each of you financially you should also enter into a co-ownership agreement. This will work to protect you in case the relationship dissolves. Plus, it can help to address how the mortgage will be paid, who pays for what, and what will happen if one person is unable to meet their end of the bargain.
Monitor and Record all Costs
If a relationship dissolves, you may want to take possession of the items you’ve paid for. Keeping track of who pays for what will help you prove what is owed to you if things do not work out.
Always consult with a lawyer before you enter into a contract with your partner if you are not married. Having someone help guide you through the process and give a clear explanation of your rights can help you in any homeowner situation.