If you want to buy a home when you are not married with your partner, significant other or best friend it is easy. Don’t let anyone tell you otherwise.
There is a major stigma around buying a home when you are not married. Even our more liberal minded family found it strange, heck I found it strange that we were going to do it that way. A study done by Redfin found that over 38% of millennials would rather spend money on a mortgage and buy a home than on a large wedding. We fell into this category, while a wedding may be in our future one day, it was time for us to buy.
…not every partnership is a marriage and some couples fall in between…
A few things happened for us before we jumped into this big decision first. It may have been easy at the moment, but it did take several years of growth and getting straight with our money before hand. So keep in mind that I am not here touting that someone dating for 2 months should go buy a home together, instead I am acknowledging that not every partnership is a marriage and some couples fall in between- this does not mean buying a home is off the table.
Why the heck would you do that?!
One of the main questions we were asked by friends and family was: “Why would you buy a home with someone you aren’t even married too? I mean, isn’t that a big commitment?”
Life decisions do not move in a linear fashion for some couples…
Life decisions do not move in a linear fashion for some couples. We get it. Some couples may also find partaking in traditional customs such as marriage step in the wrong direction for them. We get that too.
Here is why we chose to buy our home without being Married:
- The rent in our area was more than it would cost for us to get a mortgage.
Rent and COL in the Portland/Vancouver area is tremendously high. We were paying $1500 a month for a small home on a very busy street with little to no yard for the pups to run. Our mortgage for our larger home with an open layout in a quiet neighborhood with a yard costs us $1650 per month.
- First time home buyer perks!
They are really something! When we first started looking we talked with Wells Fargo since they had some discounts with my union for Realtor fees etc. They were ridiculously expensive and gave us prices that we were not going to pay. Plus they only offered mortgages where we had to put at least 20% down. After leaving there defeated and feeling we would not be buying a home we landed a seat in our local credit union who offer a first time home buyer mortgage for 0 down, low rates and almost no fees since one of us banked with them. Moral of the story- do not be afraid to shop around until you find a lender that works best for you both.
- We could do some fixing up
We knew our price range was going to be on the “low” end for the area in order to keep our payments close to what we already paid in rent. However, I had diligently binged HGTV Fixer Upper and felt confident that we could whip something into shape in no time. (We did- but a fixer upper is WAY harder than I initially imagined- let’s just say we were not Chip and Joanna Gains)
- We knew we could build some equity
The neighborhood we were looking to buy in was selling the updated and renovated homes in the $300 range. Plus, Charles sister lives in the neighborhood and had just re-financed her home after a re-model so we had a pretty good idea of how we could immediately a flip this house to create some equity.
- We were tired of funding someone else’s kids college
I know this may sound a little petty, but I was over giving our landlord money for his kids college. He was amazing and a great human, but I felt it was time to use it as an investment for ourselves.
- We both had good stable jobs
We knew we would both in our current jobs for several years if not many and had a solid network of people in the area. Our jobs were providing us more than enough income to support this purchase decision.
- Place for the dogs that we could control
We wanted a home where we did not need to panic if the dogs dug a hole in the backyard. We wanted a yard they could run in and one where we could enjoy nature. We wanted a place I could plant a garden and put down bark dust without feeling like I wasted money since the landscaping will not be improving our investments.
- We had been together for almost 6 years at the time of purchase
Knowing that my partner was not going anywhere was probably the biggest influencer of this decision. We were committed and secure. Even though this was true we knew that a house can be bought AND sold in case we were to split ways. (Thankfully this is not the case- but one should always consider worst case scenario)
So there! That is WHY we decided to buy a home while unmarried. It just makes sense for us at that moment. However we did need to make sure we were on the same page with some things first.
What needs to happen with your finances first:
– Splitting costs
Before buying a home make sure you have a budget or at least a routine for evenly splitting the costs in a way that works for you two. If you have yet to split costs on anything- splitting a mortgage may not be the way to start it off. We have been splitting costs evenly since our first apartment so had a pretty good system down. Later on when we automated everything after the purchase- life got even easier.
No secrets in love and money. Total honesty and transparency with all of our accounts from credit cards to student loans was so crucial. I will also say that when you buy a home they grab your credit report and may ask about various taxes, pay stubs and bank account statements when you meet- so make sure this is not the first time your significant other is hearing the news that you didn’t file your taxes one year.
– Long term partnership
I am not going to put a number on this one as that is so dependent on the couple and their own age. However, I will say that having a long term partner- one who you know is in it for the long haul- is an important factor when buying a home together. (Duh! :))
What you should be prepared for:
Good credit scores on both sides
Your credit score will determine not only how much you qualify for (and of course your incomes) but also for how you can be listed on the title. Make sure you both have decent scores! The lender will let you know what the minimum score is etc. In our case we needed to both have excellent credit in order to qualify for the 0 down loan and a low rate.
Joint accounts or account at the same bank where the mortgage is
It is a good idea to open a joint account- even if just for the mortgage since it is typically a hefty payment you do not want to miss. This was the responsibility falls evenly instead of on one person in the partnership. In some cases, like ours, you may have to each open an account at the same place. Charles had an account at that credit union already and I had to open my own. Then we asked to be added to each others so we could easily exchange money through direct transfers.
Deciding how you will take the title- joint, tenants in common
Lastly, an important decision is deciding how you will take the title. If one person does not have great credit- the option may be forced- or they may suggest that it be in only one person’s name. I NEVER recommend this. Having someone as the sole owner on the title is not a good idea even if you bought it “together”. The fact is since you are not married it will go right to the person whose name is on the title. If anything were to happen from death to a bad breakup- regardless of the money contributed by the other partner- legally you can walk away with nothing.
Your two choices then for names on the title are Joint or Tenants in Common. Joint means that each individual owns 50%. A tenants in common title allows for each person to own a percentage that is agreed upon such as 70% to one and 30% to the other.
Wherever your life takes you as a couple- being married is not the gateway for everything. You can have love and then a mortgage and it does work. Good luck in your future ventures love bugs!