Ready For Mortgage, But Not For Marriage? 3 Home-Buying Tips For Unmarried Couples

Posted on: 15 November 2016

There are a lot of reasons why you and your partner may have decided to delay marriage or even skip it all together. There's no reason why you have to get married to live your lives together, but being an unmarried couple does make some things – like home ownership – a bit trickier. If you and your partner are not married, but you are ready to invest in a home of your own, take a look at some tips that can help.

Be Honest About Your Credit Scores

If you and your partner are comfortable enough with each other to buy a home, you probably already have a lot of knowledge about each other's finances (and if you don't, you should.) But have you discussed credit scores? If not, it's time to do so.

Your credit score is an important part of determining what kind of interest rate you'll pay and how good a deal you can get on your mortgage. Because you're not married, if you apply for the loan together, both of your credit scores will be considered individually. If one of you has credit problems, it can seriously impact the kind of mortgage offers you'll get. This is the kind of thing that you need to know before you start filling out loan applications. If one of you has good credit and one of you has bad credit, it may be best to rehabilitate the bad credit report before venturing into home-buying.

Get A Written Agreement

It may not be especially romantic to prepare for an eventual breakup, but it is smart financial sense to do so. When you're married, you're afforded certain protections when it comes to property in the event of a divorce, but you'll have no such protection if you're unmarried. The time to agree on how you'll handle the bills and what happens if you break up is when things are good between you, not when emotions are high. Hopefully you'll never need the agreement, but if you do, you'll be protected.

You'll want to decide how you'll pay the down payment and the monthly mortgage bill. Will you split it equally? Will one of you pay the housing costs while the other pays for the utilities? What happens if one person can't pay the agreed-upon amount? Will the other assume the costs or will both of you move out of the house?

And of course, you'll need to discuss what happens if the two of you split up. Do you sell the house and split the money? Will one of you buy the other out? A real estate attorney can help you draw up a contract that both of you can agree to.

Choose the Right Title

You have a couple of options when it comes to choosing how you'll handle the title to the home. One option is to put the title solely in one person's name, but that's usually not a good plan for unmarried couples. Your other options are to hold the title as joint tenants or tenants in common. Both of these title designations mean that you both own the home, but they have some distinct differences, so it's important to choose the right one.

Joint tenants always own equal shares of the property, and joint tenants have the right of survivorship – meaning that if either tenant dies, the property will automatically pass to the surviving tenant, without the need to go through probate. Tenants in common don't necessarily have to own equal shares of the property – one of you could own 25% and one could own 75%, for example. Tenants in common can also be added to the title later, so if you needed to put the title in one partner's name only initially, the other could be added later as a tenant in common. Tenants in common do not have the right of survivorship – if one tenant dies, their share of the property goes to whoever is specified in the tenant's will. If the tenant has no will, it will go to the next of kin. For an unmarried person, the next of kin is likely to be a parent, child, sibling, or other blood relative. Considering what should happen to the property in the event of a death is an important part of choosing the right title option for your situation.

For many couples, home ownership is an important part of their lives together. You don't need to be married to enjoy home ownership, but you do need to be aware of the issues unmarried couples face when buying property together.