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Navigating Homeownership Before Marriage: Key Considerations for Couples

Wednesday, April 3, 2024   /   by Bell Home Team

Navigating Homeownership Before Marriage: Key Considerations for Couples

In today's evolving real estate landscape, an intriguing trend is emerging: more couples are opting to purchase a home together before tying the knot.  According to statistics, in 1981, less than 1% of first-time home buyers were unmarried couples.  Today, that number has risen to 16%.
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A 2023 NAR profile of home buyers and sellers. NATIONAL ASSOCIATION OF REALTORS

There are a few speculated reasons for this new trend. One reason is that couples are more financially prepared before their “I-Do” date, so taking advantage of the market now makes the most sense. Another contributing factor to the increase in unmarried couples purchasing homes is the decreasing marriage rates across the United States, coupled with the upward trend in the median age for first marriages.

Regardless of the reason, this shift in traditional timelines presents both opportunities and challenges for soon-to-be homeowners. Drawing insights from MarketWatch, here are some key considerations for couples embarking on this exciting journey:

1.   Financial Preparedness

miniature-couple-with-a-lot-of-money-a-car-house-and-airplane-successful-concept-free-photo.jpgPurchasing a home is a significant financial commitment, and it's crucial for couples to assess their financial readiness before taking the plunge. From establishing a realistic budget to understanding mortgage options and down payment requirements, financial preparedness lays the foundation for a successful homebuying experience. Couples should discuss their individual financial situations openly and work together to create a solid financial plan that aligns with their long-term goals.

Financial preparedness also brings up the topic of credit scores.  What if one partner’s credit score is significantly lower than the other? What if it drastically impacts your mortgage interest rate? If this is the case, it may be a good idea to work on improving their score before buying.  If waiting to increase credit scores isn’t what a couple wants to do, then it may make more sense to not apply for the loan together.  With only one person applying for the loan, the lender may pose an issue with both names being on the title of the home.  

1.   Legal Protections

istockphoto-1186875361-612x612.jpgWhile marriage often provides legal protections for jointly-owned assets, unmarried couples who purchase a home together should consider drafting a cohabitation agreement or a property ownership agreement. These documents can clarify each partner's rights and responsibilities regarding the property, including ownership shares, financial contributions, and procedures in the event of a breakup. 

This is especially important if the investment from the start is not equal, which many times, it is not. Cohabitation agreements can address the proportion of upfront investment and uneven monthly mortgage contributions, which would ensure properly divided accrued equity in the home per owner.  If you’re paying 70% of the mortgage payment, you should get 70% of the accrued equity in the home. Seeking guidance from a reputable real estate attorney is advisable to ensure legal protections are in place and to address any potential concerns.

1.   Future Planning

Why-You-Want-a-Cohabitation-Agreement-If-You-Buy-Property-with-a-Partner--300x200.jpegBuying a home together is a significant milestone for any couple, and it's essential to discuss future plans and goals openly. From envisioning family expansion to career aspirations and lifestyle preferences, couples should align their long-term objectives for the property. Considering factors such as location, neighborhood amenities, and resale potential can help couples make informed decisions about their investment. Additionally, discussing contingency plans and exit strategies in the event of unforeseen circumstances can provide peace of mind and mitigate potential risks.

Another factor that falls into future planning in deciding who is on the property’s title.  There are several different ways a couple can structure their property title for estate-planning purposes. One option is joint ownership, which means when one person dies, the other automatically becomes 100% owner.  Another option is to designate a tenancy-in-common arrangement, in which case each person will be able to bequeath their share to whom they want.  Having these agreements in place can alleviate some headaches in the future.

1.   Communication and Compromise:

Purchasing a home together requires effective communication and compromise between partners. From prioritizing property features to navigating decision-making processes, couples must work together to address differing opinions and find common ground. Clear communication, coupled with patience and flexibility, is essential for maintaining a harmonious relationship throughout the homebuying journey. Couples should approach the process with an open mind, willing to listen to each other's perspectives and make compromises when necessary.

At BELL Home Team, we understand the unique challenges and opportunities that come with purchasing a home as a couple and have experience working with lots of couples purchasing homes together. With our expertise and personalized guidance, we empower couples to navigate the complexities of homeownership with confidence and ease. Whether you're ready to take the next step or simply exploring your options, we're here to support you every step of the way. Contact us today to begin your journey towards homeownership together!

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Original Content: https://www.marketwatch.com/story/more-couples-are-buying-a-house-now-and-getting-married-later-four-things-they-should-know-first-62edb1bb?redirect=amp