Buying A House Together: What Unmarried Couples Need to Know

You may be surprised to hear a considerable portion of all first-time home buyers are unmarried couples. Some of these couples are of the "buy a home first, get married later" variety, while others simply have no interest in getting married. It's important that you understand the potential risks of buying a house as an unmarried couple, and it's just as important that you learn how to avoid some of the potential pitfalls.

Communication Is Key

Honesty is important in any relationship, but if you're buying a house together, you might have to discuss a few topics, both personal and financial, that you haven't had to talk about before. For example, both parties' credit histories are going to be examined when you apply for a mortgage, so if one partner has a poor credit score, that's something you'll want to bring up long before it becomes an issue.

But beyond financial matters, you'll also need to be upfront about your needs, desires, and expectations for homeownership. Purchasing a house that one half of the couple is secretly unhappy with is a recipe for disaster, so make sure all lines of communication are clear.

Sign a Prenuptial Agreement for the House

It goes without saying that no couple wants to talk about breaking up. But if you're planning on buying a house together, it's a conversation you will need to have. Not only that, but it's best to put down your plans in writing.

Who pays for utilities, maintenance, and repairs? What happens to the property if you split up? These aren't fun topics, but it's important to discuss them all the same, preferably leading to a mutually agreed upon co-ownership contract with the help of a legal professional.

Consider Your Title Options

There are three ways a couple can own a property. Whichever you choose, you'll still both be living in the home together, hopefully for a long time. Still, it's important for unmarried couples, in particular, to consider their title options carefully:

1. Sole ownership means that only one name is listed on the deed, which essentially makes one person the sole owner of the house. There are tax benefits to this option if one member of the couple makes drastically more than the other, but there is also a risk that if you split up, one of you will be left with nothing.
   
   
2. Joint tenancy means that each person owns a 50 percent share of the property, and if one person dies, the other automatically inherits full ownership. It makes sense if you're committed to going in 50-50, but an unfriendly breakup could spell trouble.
   
   
3. Tenants in common is an option that allows unequal ownership. For example, one person could own 75 percent of the property, and the other could own 25 percent. This gives you the option of tailoring each person's share to their financial contribution. One stipulation to remember, however, is that if one person dies, the other does not automatically inherit the property unless it is spelled out in the deceased party's will.

Buying a house can be a challenge for just about anybody, but if you're a couple who are thinking about buying a house before you get married, you might be in for a few more challenges than most.

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