An increasing number of unmarried couples and even just friends are deciding to buy a home together. As cultural norms and attitudes toward relationships evolve, more couples commit to each other without tying the knot. In fact, 8% of adults over 18 — more than 20 million Americans — live with an unmarried partner, many of whom own a home together.
However, buying property when unmarried comes with unique financial, legal, and interpersonal considerations.
As your mortgage lender in Charlotte, NC, we want to provide you with comprehensive guidance. Buying a home is an exciting milestone but also a significant financial decision. There are many factors for unmarried couples to discuss when entering the real estate market.
By understanding these fundamental issues upfront, you’ll be well-prepared for the process.
Establishing Clear Communication
The foundation of any successful relationship is communication. The same can be said for home purchases. It requires open and honest dialogue between partners. Before even touring houses, frankly discuss your financial goals, priorities, and expectations for owning a home together.
Lay all the cards on the table, and you’ll gain clarity and alignment. This discussion will also help determine equitable splits for your down payment amounts and how much each partner can contribute toward mortgage payments. Clearly define who will be responsible for which obligations associated with homeownership.
Drafting a Cohabitation Agreement for Legal Protection
Even the closest couples encounter unexpected hardships. People grow, life happens, and relationships sometimes end. While not the most romantic conversation, developing a cohabitation agreement with the help of a trusted attorney can offer protection. This legal document outlines each person’s rights and claims to the property if you split up down the road.
Set emotion aside during this discussion and stick to the facts. You can revisit the agreement down the line to update it if needed. Having contingency plans in place will give you both peace of mind.
Financial Preparedness
Buying property as an unmarried couple varies from the traditional model banks use to qualify married partners. As such, extra financial diligence on each individual’s part is required.
Assess Individual Credit Scores and Financial Histories
Depending on your chosen route, lenders may evaluate each person’s financial health individually. Be upfront about any past or current financial issues. Implement a plan to tackle problem areas through savings or credit score improvement before going house shopping. This can be done with your mortgage lender as part of the mortgage planning process. Circling back to communication here, you should both be willing to share:
- Current incomes, assets, debts, and credit scores
- Short- and long-term savings targets
- Views on household budgets and spending habits
- Priorities for housing features and locations
Aggregate Savings for a Joint Down Payment
As unmarried partners, you don’t automatically share finances. You’ll need to pool funds earmarked explicitly for your home purchase, including a down payment — typically at least 3% of the purchase price.
Set a Realistic Budget for the Home Purchase
Crunch the numbers together and with your mortgage professional to determine a realistic price range for your future home. Factor in mortgage payments, insurance, taxes, utilities, homeowners association dues, and maintenance costs. Identify where to trim excess spending in current lifestyle habits.
Mortgage Options for Unmarried Couples
Before house hunting, meet with lenders to analyze joint finances and get pre-approved for loan options. Be upfront about your unmarried status to get transparent guidance. Discuss scenarios like the following.
The Importance of Choosing the Right Mortgage Lender
Here is where we come in! As your trusted mortgage lender in Charlotte, NC, our team has specialized expertise in assisting unmarried homebuyers. We understand the unique legal and financial challenges you face when buying a home.
First, we take time to understand your relationship dynamics, priorities, budgets, savings, and income streams. Doing so helps us recommend tailored solutions that meet your needs as a couple while protecting each individual. We walk you through the pros, cons, and contingencies so you can make fully informed decisions.
Legal Protections and Agreements
In addition to a cohabitation agreement, we recommend a written legal contract for property ownership and shared financial obligations. It adds another layer of protection for both parties. Always work with a lawyer experienced in real estate to draw up these binding documents. None of this is required for obtaining a mortgage, but it’s something to consider between unmarried homebuyers.
Key areas to outline include:
- The ownership percentage designated to each individual
- Contributions required for the down payment, mortgage, taxes, repairs, and other expenses
- Processes should one party move out or wish to sell their stake
- What happens in case of critical events — death, job loss, disability
Planning for all contingencies upfront reduces the risk of messy legal battles down the line. That brings us to our next section.
Emergency Planning
Hope for the best, but be prepared for anything. Emergency planning is critical even at this exciting juncture. Discuss worst-case scenarios and commit contingency plans to writing.
Start by designating trusted friends or family as key contacts. Share documents with them outlining property stakes, loan obligations, and wishes if disabled or deceased. Also, provide access to critical account logins — mortgage, insurance, etc.
If your relationship dissolved, could either individual afford the home alone? Or would you need to sell? Consider options that let one partner buy the other out. Updating your will regularly also ensures inherited assets pass smoothly.
Home Search and Selection
Now, onto the fun part — picking your dream home. But with two sets of preferences at play, compromise is key. Create a master wish list of “must-have” features for both parties. Also, indicate individuals’ “nice to haves” and label these accordingly.
During showings, pay attention to each other’s reactions. Note when one person’s energy seems higher around certain homes. After reviewing options, have an open discussion around likes, dislikes, and where each person would concede.
Remember, good partners don’t let small housing disagreements degrade the relationship. You want a home that checks most boxes for both individuals while keeping your budget realistic.
Final Thoughts
We hope this guide illuminated key considerations for unmarried partners buying a home jointly. While rewarding, the process poses some unique hurdles to consider. The right mortgage lender in Charlotte, NC — like TruLoan — can help craft co-ownership solutions tailored to you as a couple while protecting each individual.
Contact us today to get started on your dream life.