Buying a home is a big decision. An even bigger decision you might make is if and to whom you will marry. So what can go wrong if you purchase a home with your fiancé, boyfriend or girlfriend prior to tying the legal knot?
Discussing this topic is about as romantic as talking about a pre-nup. That’s because what we’re about to bring to your attention is the idea of a “single-asset pre-nup” or what some folks are calling a “no-nup.” Maybe calling it a “Real estate ownership agreement” would make it easier to discuss.
Here’s what the phone call sounds like from our end when unmarried folks buy real estate together and then break up – “Hi. I bought a house with my fiancé two years ago. We never got married and now he/she’s moved out and wants his/her half of the equity and to be removed from the mortgage. I want to keep the house, but we only put five percent down. We’re deadlocked on this. Can you help me?”
From our front row seat as a mortgage lender, we think the most prudent way to go about buying a property with anyone other than your husband or wife is to have a written agreement that clearly spells out what will happen to the property and to the equity in the home in the event you no longer want to own the property together. Married people who split up have a well-traveled road map and court system to follow called divorce proceedings. Unmarried people have absolutely no road map unless they signed an agreement regarding the jointly owned property in advance.
Our recommendation is to seek the counsel of a state-licensed attorney to draft an agreement which properly protects both parties prior to purchasing a home together. Might that cost you several hundred bucks? Yes. But if you’re buying and financing a quarter million dollar asset together, that’s not much.
At the very least, couples purchasing a home together without being married should take time to thoroughly discuss and answer questions like:
- How will the home ownership be divided? 50/50 or based on how much each person brings for down payment?
- Will one or both people be on the title?
- Who will be on the Note (the promise to pay back the loan)? One or both?
- How will ongoing expenses, like utilities or major repairs, be shared?
- What happens if one person cannot make their share of the payments, as agreed upon?
- Under what conditions can the home be sold?
- How will the proceeds from a sale of the home be divided?
- What happens with the house and other joint possessions if the relationship ends?
Again, we strongly encourage all unmarried couples purchasing a home together to seek legal advice from a licensed attorney. Accunet is not providing legal advice with this blog post, just some good, hopefully helpful and eye-opening things to consider.
If you call or click on the blue button looking to buy a home or get pre-approved to buy a home with your significant other, we are not going to bat an eye or raise this uncomfortable topic. Your friendly and knowledgeable, licensed Accunet Loan Consultant will simply help you decide what mortgage option is best for your particular situation. On top of that, Accunet has lower fees than those big national lenders or your local bank, typically $1,000 to $3,000 lower for exactly the same rate. To get started on purchasing your home, call Accunet at 262-781-1100 or click the blue button.