Buying a home is an exhilarating and rewarding experience. It can also be very stressful, particularly for the many younger people in long-term relationships who are choosing to remain unmarried. This doesn't mean that it's impossible; homeownership isn't just for the dearly beloved. If you're in a committed relationship and you're keeping it that way despite having no plans to get married, there are some things to consider when buying a home.
The first thing you'll want to investigate is how to handle home insurance. For years, it was a lot more difficult to own a home as an unmarried couple. Thankfully, a lot has changed with the times. But it's still wise to do a little research; some companies will charge different rates depending on marital status. Keep an eye out for agents who are willing to offer a better price.
One of the most important details that you need to consider when applying for insurance is making sure to list both parties on the deed. When you do this, you both have a better shot at getting a married couple's rate. Even if you can't both afford an equal amount of the down payment, you can adjust the percentage of ownership and settle things later on.
Remember that with two incomes, the cost of a house goes down. While one person could theoretically pay for the entire home while the other filled it with sofas, chairs, and tables, in the end, the second person wouldn't own any property. Evenly splitting costs can make a lot more sense than having a sole breadwinner shell out all the cash. Your options also significantly increase if one partner gets a raise, and can pay things off a little faster.
Having two people on the mortgage also helps lower the risk of missing payments. As long as both people are open and honest about their finances, getting that loan paid off should be a piece of cake. Your credit ratings will also thank you for taking care of the banks.
As with many of life's more significant milestones, buying a home means that you'll eventually need to make some other important decisions. In the event of a death, it is essential to know where the ownership falls; with unmarried couples, the property usually reverts to children or next of kin. Significant others may find themselves legally out of place to live unless they can reach an agreement between themselves and their new landlords.
A similar scenario can unfold in the case of a breakup. While no one expects these things to happen, they can, and it's essential to have a plan. There is a specific type of legal document that resembles a prenup called a cohabitation agreement. These contracts allow for each party to take inventory of their assets and make sure that things are split evenly, including who gets the house.
Here are some other things you would want to include in a cohabitation agreement:
The percentage of ownership
Change or loss of job
Cost of a buyout
Overall responsibility to pay
A general process for disputes
The best plan is to think about every possible outcome and make a plan to cover it. Having it on paper covers you both. Hopefully, you'll never actually have to worry about it.
When you apply for a home, it is a smart move to check yourself, and your partner, on a variety of details. For instance, if you have great credit, but your significant other does not, the insurance company will likely only take the lower of the two. This decision can affect your rates. There are options here too, including removing the person with lower credit from the mortgage. But with one person shouldering the more significant payment, that also comes with risk.
Making sure both partners have the funds to pay the bills is essential. It's a great idea to monitor all finances, so there isn't any confusion about who's paying for what. As time passes, it become even more important to know where you both stand; if one person initially paid for a more substantial portion of the home, and the other intended to pay extra to balance it out, then that information needs to be recorded somewhere.
There is also more thing you must know: common law marriage isn't a thing. Only a few states recognize it (about 12), and there are several stipulations needed for your particular state to accept the terms. If you don't live in one of those states, you need to move there, establish residency (which might require buying another house!) and then move back. It's a lot of time, money and effort to spend on not getting legally married.
Can buying a home be a headache? Absolutely. But it's still important to remember that you're making a big statement with the one you love. This place isn't just a house. It's your home. It's where you hang your hat, cozy up on the couch together for a night of relaxing, and maybe even eventually raise a family.
Is it easier to get married first and then buy a home? Probably. There is a lot less red tape to maneuver around. But the number of unmarried couples that own homes is probably going to continue to increase. It's okay for couples of any kind to build the kind of life together that they want.