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More unmarried couples may be considering buying a home together, particularly in quarantine. If you are thinking about buying a house with someone you aren’t married to, there are some financial and practical risks to think about. Here are three things to consider before buying a place together.
1. Who is signing on the dotted line?
You and your partner will need to decide who holds the title to the house, who takes on the mortgage and who itemizes their deductions on their tax returns. Talking to financial planners and lawyers can help the two of you decide whether it is smarter for one partner to take on the mortgage or whether splitting it makes more sense. Titling options include sole ownership, joint tenancy with rights of survivorship, or tenants in common. For younger couples, tenants in common tends to be the most common form of titling, as each often wants to have an ownership stake but may not want the other person to inherit that stake (as would be the case if they owned the home in joint tenancy with rights of survivorship).
2. Do you know your partner’s financial situation?
Transparency is important. As a couple, you should be comfortable sharing your credit scores and making one another aware of any outstanding debts or income you might not have previously disclosed. Consider setting up a joint bank account for things like house expenses, property taxes and home repairs, says Mark Reyes, a financial planner at Albert, a financial-planning app.
3. What happens if you split up?
This is where planning ahead on issues like the title and mortgage is key. There may be questions about who continues to own the property, whether one partner can buy the other one out and who takes on responsibility for repaying the mortgage. A written and signed legal agreement, such as a simple partnership agreement solely dealing with the home, can help to answer these questions and to also spell out each of the parties’ rights and obligations, even if the relationship continues, says Avi Kestenbaum, a partner at Meltzer, Lippe, Goldstein & Breitstone.
Read the original article by Veronica Dagher here.
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