Advice for couples starting a life together
My partner and I have been together for two years and we are thinking of getting married, but we’d like to use the money that we would spend on a wedding as a down payment for a house. Is this a good idea?
Not Married Yet
Dear Not Married Yet,
A home complete with a white picket fence is every young couple’s dream. If you’re unmarried you might feel this is out of your reach, after all, aren’t wedding bells supposed to precede house hunting? Well, not always. There are many couples who are opting for home ownership before marriage.
Of course, as with anything, there are pros (investing in your future and paying your own mortgage instead of paying somebody else’s for example) and cons (what will happen if you fall out and end up not getting married?).
I strongly recommend you get legal advice from an experienced real-estate lawyer before moving ahead. However, I have outlined a few helpful tips below:
While married couples are often viewed as a single unit, you have the advantage as an unmarried couple to decide which person best fits the homebuyer profile (which of you has the best credit score and the most assets).
You can choose to cosign or own your home jointly if you prefer. Keep in mind that if one of you has a less-than-stellar credit rating it could reduce the amount of money you qualify to borrow. Having two incomes, however, could increase the amount of money you are able to borrow. There are three main options you can use to title your home as an unmarried couple:
This means one of you is 100 per cent responsible for the debt. The other is not listed on the title at all, thus they have no rights or responsibility regarding the property. In this scenario, be sure you are not paying for something you will never own.
This means that both of you own a share of the property. Each of you can pass your share on to a beneficiary or beneficiaries named in your will upon your demise, thereby protecting your retained interest.
It will prevent your home from transferring in its entirety to the surviving partner should one of you pass away. Keep in mind that wills belong to the individual and can be changed without having to give a spouse, or significant other, any notice. It is possible that you will end up being joint owner of a property with a person or people with whom you don’t get along.
This gives you equal ownership of the property. If one of you should die, the property will automatically be awarded to the living partner.
Do understand that debt is permanent. If you choose to enter into a joint-tenancy arrangement and your relationship ends, you are both 100 per cent responsible for the outstanding debt.
Although you might not want to think about “what if” scenarios, it’s important to choose a home that you could afford to pay for on your own if necessary.
This will also come in handy if your partner becomes ill or loses their job and is unable to contribute financially. Life is a winding path, it can throw all sorts of unanticipated things at us; don’t stick your head in the sand on this one.
Create a legal agreement
Yes, technically, if you own the property jointly you are both legally bound to it. However, this agreement is slightly different. Seek out the help of a lawyer to create a binding agreement that outlines who will be responsible for what aspects of the property — who pays the taxes, landscaping, repairs on the home, etc.
This will prevent a lot of heartache down the road by getting expectations out in the open. If you can’t agree on these basic things, home ownership with this particular partner is unlikely to be successful.
Buying a home isn’t easy
There is a lot that you have to do before buying a home such as examining the importance of loan qualifications, surveys, staking and lot plans and structural survey inspection.
Know the expenses
Home ownership is a grand adventure, one that can also come with many unexpected expenses. Be realistic about how much routine home maintenance will cost you.
However, I can assure you that by and large, the benefits of home ownership far outweigh the problems. I wish you and your partner happy house hunting as you face this new adventure of home ownership together.
•Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for nearly 30 years. If you have a question for Heather, please contact her at firstname.lastname@example.org or 332-1793. All questions will be treated in confidence. Read this article on Facebook: Ask Heather Real Estate
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