Whether you’re simply having fun, keeping each other company, or planning to someday tie the knot with your current significant other, dating can sometimes be filled with uncertainties. This is especially when it comes to making big decisions such as investing, starting a business, or buying a home together, with each party playing a significant role in the transaction, financially or otherwise.
And as you might already know, such moves are often surrounded by several concerns, including legal implications and what-ifs. What if we break up? What if he or she loses attraction, and we end up growing apart before marriage? What if we end up fighting over who contributes what? Do we need to sign an agreement?
Read on to find out whether or not buying a home with your boyfriend or girlfriend is a good idea.
What convinces unmarried couples to buy a home together?
Recent times have seen more and more couples waiting a tad little bit longer before tying the knot with the love of their lives. While most people get married in their late twenties or early thirties, a recent article by the insider noted that an average of 4.9 years of being together before most couples get married.
And if data from many surveys are anything to go by, a good chunk of those 5 or so years involve cohabiting in an apartment or living together one way or another. Successfully living together in a rented house is one of the various reasons people, especially millennials, decide to own a home together. Other compelling reasons to do so may include:
● To afford a home in an expensive location
● To take advantage of dips in mortgage rates
● To spend money more wisely as opposed to an expensive wedding
The real benefits of buying a home together: is it a good idea?
Purchasing a home with your boyfriend or girlfriend is not such a bad idea, and for a few reasons. Perhaps the biggest advantage is that you get to share the costs. At this point, it’s less about comparing buying vs. renting and more about whether to buy it in cash or get a mortgage.
Either way, contributions from both of you will help you save money in the process compared to buying it alone.
In case you’re using a mortgage, you will both need to raise less for the down payment. Moreover, your lender will most probably consider the income and credit scores of both parties, meaning that you can qualify for more and buy a better, bigger home.
And, just like eloping, big moves like buying property together can be a show of commitment from either party to each other. It could even help eliminate doubts and promote your better half’s confidence in your relationship. All the same, it doesn’t come without a fair amount of risk as well.
Crucial considerations when buying a home with your boyfriend/girlfriend
1. Is your relationship serious enough?
Purchasing a house with your boyfriend or girlfriend should not be done impulsively. You might be genuinely excited about the decision, but if you’re not sure whether you are 100% committed to each other, the move might backfire on both of you.
While being happy in a relationship is paramount, it is equally important, to be honest, and level-headed in choosing a house to buy together.
You need to discuss money matters with your partner. And not just how much to save. Also how you’ll pay for the down payment, maintenance costs, and so forth are also critical matters to bring to the table. If your relationship is serious enough, these are all matters you can work through in unison.
2. Shopping around for the best mortgage rates
Plainly put, homes are expensive. It’s why many people approach lenders to afford their dream home before they are too old to enjoy it to the fullest.
You can actually walk into your local bank and come out with your mortgage approved, but at what cost? Not all mortgages are the same! At the very least, remember that the interest rate for home loans will vary from one institution to the other. If you are not happy with the rate offered by the bank, it is still wise to shop around for the best deals.
Some of the best rates on home loans are usually offered by alternative lenders such as credit unions and other smaller institutions that hunger for growth, so don’t forget to explore your options carefully together. The minimum down payment they request might also be much more lenient compared to bigger, well-established banks for you guys.
3. Can you afford a home together?
This is also an incredibly important question for couples to ask themselves before buying a premarital home. With the average costs of homes in major American cities sitting between 400,000 and $1M give or take, buying a home as a couple requires a lot of upfront investment.
You will want to carefully consider your financial obligations, as well as your incomes, and credit scores at the very least. If you and your partner are not financially independent, it is wise to opt for a mortgage under a joint account. A joint account can provide for extra resources to finance such a significant purchase.
4. How to split the costs
It’s also safe to have a plan on how you intend to split the expenses of your home purchase, covering what each person should be responsible for in terms of mortgage interest or down payments.
If you don’t plan to make any modifications to the house, you can decide on a design that is both functional and cost-effective for your budget. It also pays to have a clear picture of how you intend to cover the various costs of home maintenance after you’ve settled in.
5. Who keeps the home in case of a breakup?
In cases where a breakup is not likely, it may make sense for each party to take ownership of his or her own property and then divide the payments to maintain the home. As mentioned, if you guys are serious about each other, you shouldn’t hesitate to sacrifice some of the expensive features of the home to make it more affordable for both of you.
However, there’s no denying that breakups are more likely between unmarried couples compared to stable marriages, especially where finances are concerned. Besides, the term “breakup” is seldom used in marriage.
Rather, you’ll often hear of “we had a fight”, “we grew apart” or “we just couldn’t make it work”. In the worst-case scenario, it leads to either separation or divorce, and that’s where marital law comes in.
Well, the law is pretty clear about the division of property owned by a legally married couple after divorce, who keeps what, and why. But if your guess is as good as anyone’s, there’s a big grey area regarding who keeps the house after breaking up with a boyfriend or girlfriend with whom you purchased it together!
But people are different. Some will walk away without holding grudges, while others might come with all sorts of lawsuits and accusations a few months or years down the line after parting ways. This is all the more reason to consider whether or not you should have an official, legally-binding agreement before buying a home together with your unmarried spouse.
6. Should you sign an agreement?
While your personal feelings might come into play while you decide whether you want to buy a home together, it is always a good idea to sign an agreement to let both of you know that you both intend to make a life-long commitment to the house.
People make mistakes in relationships, and the person you’ve thought of to be an angel for many years could end up coming out as the viper you never knew. Certain relationship issues are actually pretty easy to get by and forgive.
If he or she cheats and does it again, and probably once more, what you envisioned as a happy, successful marriage in the future could instantly turn into a mere dream if not a nightmare!
And since you or your spouse could be on the receiving end, signing an agreement that covers how to resolve matters in case you decide to part ways can be a great way to cushion your financial and emotional future.
Downsides of buying a home with your SO before marriage
Even in marriage, finances are one of the most common reasons love birds find themselves at loggerheads with each other. Unlike cohabiting in a rental apartment where one of you pays rent or you both contribute a portion of your income monthly, sharing the burden of buying a home can come with a significant level of risk to both parties in an unmarried couple.
And this can come in several realistic ways. For instance, one (or) partners may:
● Not be committed enough to settling down
● Have an ill motive
● Not being financially capable
● Have a low credit score
● Have different financial priorities
So, should you really go ahead and buy a home as a couple before marriage? The most realistic answer would be YES, but it depends. It will largely depend on both of you acknowledging the legal, financial, emotional, and social implications of doing so.
And for what it’s worth, sometimes what matters most is how you understand and relate with each other regardless of whether you pay rent, own a home, or live in your parent’s house.
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