Buying a House With Someone You Are Not Married To
Are you currently in a relationship? If so, you must realize that it can be such a joy. Whether in a newfound relationship or married for many years, one of the greatest joys of being with your significant other is sharing your life while helping each other grow and flourish.
Some couples who aren’t married are ready to take the next step, but I’m not talking about tying the knot. For their own reasons, unmarried couples may still be waiting to be officially wedded or may not marry at all. However, they may feel ready to begin their journey on something other than marriage, but just as important: the path to homeownership.
Married couples are the number one demographic of homebuyers at 61%, with single women right behind them. Even though married couples who buy a home together are common in the industry, times have changed to where homebuying can be a milestone accomplished by anyone regardless of their relationship status. What about unmarried couples buying a home? While it is not unheard of, it doesn’t happen as often and can even be a hot topic of conversation. If you and your partner are unmarried and want to buy a home together, you may want to consider a couple of things before applying for a mortgage.
Buying a House Married Vs. Unmarried
If you’re thinking of buying a house with your significant other while unmarried, don’t worry because you’re not alone. About 10% of home buyers who bought a home in 2022 were unmarried couples, which may increase later as inflation cools and affordability challenges decline. Even though it’s possible, you will find that many experts in the industry advise buyers not to buy a house when they’re not married. Why is that?
Matrimony is more than a symbol of love and dedication to each other; it is also a legal arrangement. According to Nolo.com, “Marriage is the legal union of two people, who join together after they obtain a marriage license from their state and take part in a ceremony.” When you become married, certain rights and responsibilities within your relationship are bound by a legal contract, including financial rights, such as sharing property. If you’re married, the path to homeownership is a little easier to go through versus if you were not married. Because married couples can share their finances, and assets, and comprehend what will happen to the house if the relationship ends, applying for a mortgage sheds off some stress from the process.
Living With Your Partner
Are you already living with your significant other? An estimated 20 million couples who aren’t married already lived together in 2022. If you have yet to make this lifestyle change, there is much to consider before you pack your boxes. One of the first things to consider before buying a house as an unmarried couple is living with them. Not as a partner, but as a roommate. If you’re already living with them through a rental, then you may have an idea of how it feels like to live with them. You understand their daily routine, how they maintain their living space, handle chores, and other aspects of cohabitation. If you already live with your partner and truly enjoy the experience despite any issues, then not much will change regarding your lifestyle.
However, for those who have never lived with their significant other, then this is not something to blow over. Even though you may spend a lot of time together and enjoy that, it is an entirely different experience when it comes to living with each other. At some point, you need to learn to be practical about your living situation and adapt to each other’s quirks and habits that you may have never noticed before. If possible, try staying at each other’s homes for a brief period of time or have a long and in-depth discussion about each other’s living routine.
Applying for a Mortgage Together
Now that we’ve got the living situation covered, let’s focus on the financing of it all and how you both will apply for a mortgage together when you’re not married. Most lenders will accept applications from unmarried couples but may face any challenges due to the legal framework. Fortunately, RWM Home Loans has helped several unmarried couples finance their home and is fully capable of getting you both pre-approved.
To be co-borrowers means you and your partner are applying for a mortgage together for a property you both own. Any two people can apply for a mortgage, but whether you are pre-approved for a mortgage together is a different question. How do lenders consider both of you when looking at your application? Lenders may consider many things with each of you, such as your financial histories, incomes, and DTI ratios. Similar to how you would provide documentation if you were to apply for a mortgage on your own, the same applies if you are applying with your significant other. Only now, each of you will provide your income and asset documentation to be verified and reviewed together by your chosen mortgage lender. The lender will take the documentation from both of you into consideration before providing you with a pre-approval letter, and they make want to do another consultation to review your options.
Co-Ownership of the Property
You may be wondering how you both can own property together. By being co-borrowers, you both are co-owners. Though in some cases, the type of ownership may be different. Applying for the mortgage may not seem as difficult as you may think, but an important part of the early steps of the process is deciding what kind of ownership will be had by you two.
Buying a house together isn’t as simple as calling each other co-owners as there are different types of ownership that you both need to consider and decide on. The different types of ownership for unmarried couples are sole ownership, if someone is buying the house on their own and their significant other is just living with them, or joint tenancy, where each owner owns the property equally, or tenants in common, which does not require equal ownership between both parties but allows each person the right to sell the property. Talk with a legal professional should you have any questions on these terms and which would fit best for your situation.
Splitting Costs
Have you discussed how you will split living costs if you buy a house together? 50/50? Based on income? When considering getting a mortgage together, discussing costs can be an uneasy, but necessary topic to cover beforehand. Figuring out the financials of your situation is not a simple task, but since you both will be living together, there will be more costs to split that don’t just include your monthly mortgage payment.
Think about house items or services you purchase frequently: groceries, maintenance, etc. How will these be split between you two? A simple way to approach this is to go half on these costs. Perhaps you can keep an excel sheet for budgeting to ensure everyone pays their part, or you can open a joint account to put in a certain amount of money each month, which goes towards these essential living costs. Another strategy adopted by couples is splitting costs based on income. Fairness is the key in this particular strategy because it indicates that the person who earns more has to pay more and vice versa. There may be extra calculations to do on your part to finalize the split costs, but it encourages a fair share between the parties involved.
Preparing for the Worst
Of course, couples want to stay positive when buying a house together and hope everything goes smoothly from start to finish. Even though that’s most couples’ goal, it is always smart to be realistic about every possible situation. Let’s think about something that we obviously wouldn’t want to happen, like breaking up. Again, this is an uncomfortable scenario to discuss, but staying proactive through this financial decision will make things a lot easier if things don’t turn out the way we want.
Even worse, one of you may pass while still owning a house as an unmarried couple., Based on your type of ownership, the surviving owner may absorb the deceased person’s interest in the property, or take a different route, such as selling the home. Real situations like these are why we stress reaching out to a lawyer if you are unmarried, which we will cover next.
Getting a Lawyer
The last thing to consider if you want to buy a house as an unmarried couple is to get a lawyer. Since you are not a married couple and don’t have a legal arrangement to outline these things, you can still get a lawyer to draft up a property agreement for you both to prepare for all kinds of situations. The agreement should have clear, solid details of your financial situation, such as the percentage of ownership, payment responsibility, buyout agreement, dispute process, and exit strategy. While it will be a lot of work to go over and may cost you extra to get a lawyer to help you, it will be worth it in the end.
Even if you’re planning to get married eventually, remember that no one can predict the future. Fingers crossed that everything goes as you planned but creating a legally binding document that outlines everyone’s expectations for you and the property’s future is one of the smartest moves you can make when buying a home together.
Ready to Take Your Relationship Home?
So, can unmarried couples buy a home together? The short answer is yes, of course. It happens more than you may think, and while there is no correct path to achieve your homeownership goals, it will always be specific to your unique situation. The key points to remember are your living situation, how to split costs, and hiring a lawyer. Don’t forget to have a long talk with your significant other to go over all aspects and possible scenarios of this decision to ensure you understand each other’s expectations and are on the same page. Keeping an open mind while considering each other’s perspectives and opinions will be a way to thrive together while committing to homeownership and each other.
Have you found a house that meets your preferences but can’t quite get your offer accepted? We have some helpful tips for you to stay ahead of the competition.
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