Unmarried Couple’s Guide to Buying a Home

Unmarried Couple’s Guide to Buying a Home
December 6, 2022 John Wason
In FlagHomes Blog
Happy couple reading an unmarried couple's guide to buying a home on a laptop

The United States Census Bureau reports that the number of unmarried couples in the US has increased from 6 million to 17 million in the last two decades. Many unmarried couples choose to share housing rather than get married. Consider a few things before buying a house with your significant other if you don’t plan to get married. To help you do this, we’ve consulted an experienced team of real estate professionals, and with their help, we’ve created a thorough unmarried couple’s guide to buying a home. Now let’s get to work!

A step-by-step guide to buying a home -unmarried couple’s edition

The trend of unmarried couples purchasing a home together has increased in recent years. Some long-term couples, faced with rising rent prices, diminished social pressure to get married, and a more volatile economy, are looking for more tangible methods to demonstrate their devotion to one another. After all, purchasing a home is a smarter financial move than throwing a wedding.

Couple sitting in chairs across from each other and looking at their smart devices

However, buying a house with someone else, especially if you’re not married, comes with many potential pitfalls. In other words, you’ll need to make a major choice. It’s crucial for the couple to weigh the financial and personal consequences of their decision carefully. But what should you consider before you start looking for a new home? You’ll find everything you need to know in our unmarried couple’s guide to buying a home.

#1 Thoroughly evaluate your relationship

Before you start looking at houses online, it’s essential to be sure this is something you definitely want. Whether you’re considering moving for a long-distance relationship or you simply feel like you’ve been together too long not to make this step, don’t rush your decision. It’s time to ask yourself some tough questions and evaluate your relationship on a deeper level.

You should give some thought to how the commitment to buying a house together can alter or test your relationship. Homeownership introduces a wide range of additional obligations and options. It’s vital that you two are on the same page before doing something as major as buying a home together.

A happy couple lying in bed and looking at a laptop together

Also, it’s probably not a good idea to buy a house with someone you’ve never lived with before. Therefore, think about renting a place together first. It’s also important to consider the factors that have led you to this point in your relationship. It should be something that both of you are enthusiastic about. This is a significant choice with far-reaching implications for both. So if it doesn’t sit well with you, it’s probably not the best course of action.

#2 Consider your finances

Whether you’re married or not, it’s crucial to have an open discussion about money before buying a property together. Now is the time to really think about your partner’s financial behaviors. For instance, inquire how they usually spend their money, find out their credit rating, and to what extent they will be responsible for making mortgage payments.

It’s crucial to figure out how much financial obligation you feel you can handle together and make sure your financial and relationship goals are in sync. No matter how much love you have for one another, you should not make any assumptions or go on based on the hope that things will sort themselves out. Despite its potency, love usually isn’t enough to sort out complex monetary issues.

Therefore, before you get excited and start to plan things to do when you move into your new home, make sure you figure out how you will pay for everything. It’s essential to think about more than just the significant initial investment and monthly mortgage payment. Even if you plan to keep your money separate, you might want to consider opening a joint account to pay for the house.

#3 Agree on who’s going to take out the mortgage

If you are looking for a mortgage as an unmarried couple and one of you has had credit issues in the past, the other person may need to apply for the loan on their own. You’ll have to have an honest discussion about who among you should submit the mortgage application. Most lenders will prefer to see an application for a mortgage made by a partner with a longer and more stable credit history.

Therefore, make sure to examine and compare each other’s financial profiles to find out who is more financially stable. The applicant’s financial health will determine the mortgage rate and terms offered. You might not give much thought to the difference between mortgage interest rates, but a slight reduction in the rate could save you thousands in interest payments.

It’s also possible to find a mortgage lender who’ll accept an application from both parties at once. However, doing so isn’t always the greatest choice. Say one of you has a high debt-to-income ratio due to a low credit score and a lot of student loan debt. So if one spouse has a higher credit score and lower debt-to-income ratio, it’s smarter if they apply for the mortgage on behalf of the two.

#4 Consider signing a cohabitation property agreement

Even though it’s not pleasant to discuss, you and your partner should have a plan for what will happen if your relationship ends. Don’t add to the misery of a breakup by placing yourself in a position where you could end up homeless and several years into a mortgage payment with little equity to show for it.

Don’t misunderstand us; we firmly believe that marriage doesn’t prove how healthy and strong a relationship is. However, when it comes to divorce, there are laws and complex sets of statutes in place to protect both parties. In addition, prenuptial agreements are also standard as a means of shielding personal assets in case of a divorce.

Person handing a contract and a pen to another person to sign

If a nonmarried couple decides to make a life-altering investment, like buying a home together, they should have the same safeguards as married couples in case of a breakup. This is where the “no-nup” or cohabitation agreement comes in. Cohabitation agreements, or “no-nups,” are legal contracts that help unmarried couples who live together determine who owns what, how much are both of you accountable for paying, and what happens in the event of a separation.

Final words on the unmarried couple’s guide to buying a home

We hope our unmarried couple’s guide to buying a home helps you figure out the best way for you and your loved one. In case you’ve figured out that now is the right time to start looking for a new home, make sure to reach out to an experienced real estate team. Buying the home of your dreams will be that much easier with the help of the pros on your side.