It’s increasingly common for people to live together but not be married. For example, in the past 20 years, the number of unmarried couples living together has almost tripled. You might be planning to wait to get married, or maybe you’re not going to at all, but what if you want to buy a home together? It’s possible to buy a home as an unmarried couple. However, it can be a little more complex than it is for a married couple. The following are some considerations to proactively think about when buying a home as an unmarried couple.
Buying a home as an unmarried couple
Buying a house with a partner can be a smart investment in your future, but unmarried couples face unique challenges when buying real estate together and seeking financing. Luckily, there are a few precautions you can take to protect yourself and your partner in case of a breakup or other unexpected event. Before purchasing a home together, you and your partner should:
Agree on financing
Taking out a mortgage can have huge implications for your finances. Talk to your partner about your budget and how much you’re comfortable financing before you start searching for a house. As part of this process, review each partner’s finances, including credit scores, monthly debt service and any other factors that could influence your ability to cover housing expenses. Once you know how much you can each contribute every month, calculate how much house you can afford to finance.
Have a cost-sharing plan
While sharing costs 50/50 may appear to be a straightforward method to share the responsibilities of homeownership, it isn’t always the case. Before you buy a house, figure out who will be responsible for property taxes, homeowners association fees, insurance premiums, and maintenance costs to make sure everyone is on the same page. Also, consider how you’ll split up utilities and other household expenses.
Work out a cohabitation agreement
A cohabitation agreement is a legally binding contract that details the division of property and other assets in case of a breakup. This document must be properly drafted and executed, so we recommend working with an attorney to make sure both parties interests are adequately protected. Here are some sections to include in your cohabitation agreement:
- Type of ownership on the deed and title
- Sharing of housing expenses
- Buyout terms in the case of a breakup
- Exit strategy if one partner wants to sell
- Dispute resolution process
If you and your partner sign a cohabitation agreement, periodically revisit the document to address any changes to your circumstances.
What happens If you split?
If you’re unmarried and split from your home’s co-owner, the fate of the property generally depends on how it is titled. Are there are any other agreements in place, like a cohabitation agreement. To avoid conflict and confusion in the case of a breakup, it’s imperative that you and your partner detail what will happen to the house if you split before purchasing the home. It’s never pleasant to consider the end of a relationship. However, a carefully written cohabitation agreement can provide peace of mind. Moreover, it can save you money and further complications down the line.