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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Soren Svendsen/Getty Images November 11, 2021 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Not ready to get married, but ready to ? You and your partner aren’t alone. Unmarried couples made up 9 percent of homebuyers in 2020, according to the National Association of Realtors. That number seems likely to increase, too, as couples reconsider the financial implications of saying “I do” in the wake of the pandemic. Lightbulb Bankrate insight If there’s a possibility you or your partner could relocate for work or other reasons in the next few years, it might be better to hold off on buying a home. That’s because the transaction costs of buying a property and then selling it in a short time can eat up your equity. While buying a house with your partner can feel like an exciting new chapter, it’s important to recognize that it doesn’t necessarily look that way in the eyes of a court. “With married couples, you’ve got the domestic relations courts that have a framework of rules. Those rules don’t apply when an unmarried couple splits up,” says Barry Kreisler, a real estate attorney based in Chicago. If you’re an unmarried , consider these six questions before beginning your search: 1 What are the laws for unmarried couples
In a select few states, your decision to live together as partners could classify your arrangement as a common law marriage. However, laws in most states treat unmarried couples like individuals when it comes to assets like real estate. So, it’s up to the couple to write their own rules that dictate how their property is to be handled in the event of separation or death. 2 What should be included in the property agreement
To get the same protection as a traditionally-recognized marriage union, unmarried couples buying a house together must write their own defaults. This is typically known as a “cohabitation property agreement,” and it should include rules for how the property will be divided if the worst happens. The agreement should have clear details, including: on the (joint tenancy with rights of survivorship or tenants in common) Percentage of the house each party owns Payment responsibility (and what happens if one party doesn’t fulfill their obligation) Buyout agreement What happens if there’s a job transfer Dispute process Exit strategy “The key thing is for them to put their expectations for each other in writing,” Kreisler says. “Are they going to contribute financially on an equal basis? Who is paying for what?” It’s wise for couples to create this agreement with an attorney while they’re in a harmonious state — “that’s the time to resolve what happens if they break up or one of them gets a job transfer,” Kreisler says. 3 What if I m not on the mortgage
If you or your partner have , you might not qualify for a — and, even if you do, your interest rate will be higher. To avoid this, you might decide as a couple that only the partner with good credit should be on the mortgage. pull credit scores from all three reporting agencies (Equifax, Experian and TransUnion) and generally take the second-highest score, or the middle score of all three. This means if the three agencies report your scores as 689, 682 and 676, respectively, the lender will consider the 682 number for your loan application. If you’re applying for a joint mortgage, the lender will look at both applicants’ middle scores and take the lowest of the two. If your middle score is 682 and your partner’s is 575, then your score for the application would be 575. While one partner’s higher credit score will increase the odds of approval and better terms right now, things can get thorny when it comes to the down payment and determining who pays for what, and sole ownership could create major headaches later on down the road. “If one person has bad credit, then they could be a partial applicant as long as the partner can handle the additional debt,” says Mark Kraft, regional mortgage manager for U.S. Bank in Denver. “They could also be on the title but not on the loan — but, that’s a big risk because you’re giving someone half the house.” If you decide to leave one person off the mortgage but both parties are on the deed, the person who is on the mortgage shoulders the legal responsibility to repay the loan. “The benefit of being on a title is that your ownership interest is official,” Kreisler says. “The person on the mortgage has all the liability, while the person on the title has rights with no liability.” The situation could also be a problem for the partner who is on the deed but not on the mortgage. For example, if they’re paying half the mortgage costs and taxes, but the partner whose name the loan is under secretly stops paying the mortgage, the house could be repossessed by the lender. The partner on the deed could be out of their cash and house. 4 Who gets the home if you break up
Unmarried couples buying a house certainly plan to stay together, but plans often change. While a breakup is hard enough, owning a home together will complicate the situation. After all, you can’t split a house in half. Assuming both parties are on the deed and there’s no property agreement, the home can either be sold or one person can buy out the other. You’ll need to establish a buy/sell agreement with a pricing mechanism and definitive timelines for acting on it. If neither party can buy the other out, the best plan is to agree to sell the home within a fixed period of time. A property agreement can make things easier to work through. If you own 85 percent, for example, and want to stay in the home and your partner wants to sell, then you would only need to buy out their 15 percent ownership. However, if you’re both on the mortgage, then you would also have to refinance the mortgage in your name. “The only way you can take someone off the loan is if you refinance,” Kraft says. Refinancing a joint mortgage into a mortgage with one borrower can present some hiccups, too. You’ll need to be able to qualify for the entire loan in your name, and you’ll need to be prepared to pay all the for the new loan. 5 What happens to the property if one of us dies
With a married couple, the laws of intestate succession apply if neither party has a will. The law basically states that if you’re married and don’t have children, it goes to the survivor. That rule isn’t automatic for unmarried couples, Kreisler says. In the case of unmarried couples buying a house, it depends on how they hold the title. There are two ways to hold title in this scenario: tenancy in common and joint tenancy with rights of survivorship. Tenancy in common, or TIC, means each person owns a percentage of the house, and if they die, their interest in the property goes to their estate. Joint tenancy with rights of survivorship dictates that if one person dies, the survivor inherits their share of the property. A third way to own the property is through a partnership. “In the partnership agreement, you can put down exactly what you want to happen in the event of death, as well as disability or a breakup,” Kreisler says. 6 What if we re planning to get married eventually
It can be hard to talk about breakups and death in the midst of a landmark event in your lives: buying a home together. Perhaps you are planning on officially tying the knot down the road, so you wonder if you need to worry about any potential challenges. Even with an eventual marriage on the horizon, creating a legally binding document that outlines both of your wishes for your property is still a smart move. If you do decide to get married, you will want to revisit all of the paperwork. For example, if only one of you is on the deed, you will want to add your spouse’s name to the deed. This can be done by filing a . You’ll also want to consult with a tax professional to ensure you’re maximizing the mortgage interest deduction. As an unmarried couple buying a house together, taking advantage of that deduction is a bit more challenging. When you decide to make it official, you’ll be able to enjoy the benefit of lowering your tax bill. Dealing with questions about your mortgage is only part of successfully managing your finances. Here’s . Other considerations before buying buying a house when you re not married
There are some other things to think about when you’re buying a home prior to getting married. One is taxes. Because you file taxes separately, only one of you will be able to take advantage of tax deductions like the . Have a plan for dealing with this so you don’t wind up fighting over who gets to save on their tax bill at the end of the year. Another consideration is how you can make the most of the situation for your relationship. If you’re buying a home with someone, you likely already know a fair bit about their finances. However, getting a mortgage involves a deep dive into both of your credit and financial situations. While you’re getting the necessary paperwork together for the lender, you can share it with each other and take the time to discuss your money and build a financial plan for the future. Beyond the financial implications of homeownership, there are also lifestyle impacts. Owning a home means dealing with things like mowing the lawn, shoveling snow and completing basic home maintenance. Think about how you’ll split up these tasks. Not being on the same page when it comes to taking care of your home can cause arguments and relationship strife. It can be an even bigger source of consternation if you and your partner don’t have the same financial interest in the home, as the person who isn’t on the deed might not appreciate putting work into a home they don’t really own. The bottom line
Buying a home is an exciting moment in anyone’s life. If you’re buying with someone who you’re not married to, understand that it can complicate the situation. No one likes to plan for a breakup, but they do happen and planning ahead can make an already painful situation a little less difficult to deal with. Learn more
SHARE: Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Related Articles