More and more couples are living together before they marry. While many of these couples may start out in apartments, the longer they live together, the more they may think of buying a house together. Especially in our current economic climate of record low mortgage interest rates, buying a home together seems like the next logical step in a committed relationship. Be forewarned, though. There are many risks of buying a home as an unmarried couple.
Risks of Buying a Home as an Unmarried Couple
There are several reasons why you may decide buying a home as an unmarried couple is not right for your situation.
Break Ups Can Be Messy and Expensive
Should you break up down the line, owning such a large asset together can be messy and expensive. Many couples who get to this point find themselves wanting to sell the house but arguing over particulars such as which offer to accept, what price they’ll accept for the house, and who gets what percentage of the profits.
Also, remember that selling a house isn’t like getting out of an apartment lease. You’ll be paying thousands of dollars in closing costs, real estate agent fees, etc. You may just want to break up and move on, but when you own a home as an unmarried couple, it may take you months and thousands of dollars before you can free yourself of the house and your ex-partner.
Death of One Partner
If you’re married and both on the mortgage and deed, when one person dies, the other person inherits the deceased’s share of the home. However, that doesn’t happen if you’re unmarried.
If you’re unmarried and one partner dies, the partner’s equity in the house goes into his estate. If you haven’t legally stipulated that the surviving partner inherits the house, you may have a legal fight on your hands to stay in your own home.
Two Ways to Make Buying a Home Together Safer
If you’re still intent on buying a home together, there are two things you can do to minimize the risks of buying a home as an unmarried couple.
Have Only One Person Buy the Home and Hold the Deed
The easiest way to avoid potential conflict when it comes to owning a house as a couple is just not to do it. Instead, one partner should buy the house and have it in her name. The homeowner will be the one to pay the insurance, taxes, repairs, and maintenance. The other one will simply pay rent.
If they do end up marrying, it’s relatively simple to add that person to the deed, and he can then start paying part of the mortgage and the other expenses.
However, if the couple breaks up, the person who was renting can simply move out. The owner remains the owner, and there is no messy process of selling the house and splitting the proceeds.
Sign a Cohabitation Agreement
A second option is to consult a lawyer and sign a cohabitation agreement. This document will legally spell out how much each partner will pay on the mortgage monthly and in the case of repairs and maintenance. The document will also define what will happen to the property should you break up.
While signing such a document is not romantic, a cohabitation agreement will help you take the emotions out of selling a house should you break up.
Buying a home together may seem like the next logical development in your relationship. However, keep in mind, doing so is full of risks. You may be wiser to wait to buy a home until you are legally married. Then you will have all the legal protections of such a partnership.