For most, this is an awkward topic to cover. More and more couples are electing to buy a home together before marriage, as well as couples that choose to remain common-law. This change in societal norm can result in uncomfortable talks between your sweetheart, your lawyer, your Realtor and your parents. However, the most productive talks ARE the awkward ones! And, in terms of real estate, there’s always uncomfortable scenarios you need to be prepared for anyway. In a traditional fashion, married couples had to plan and arrange their finances in a streamlined way for their real estate investment. Does this change for non-traditional you and yours? Nope! In fact, it’s pretty much the same – sans the same last name. Let’s dive right in and talk about it all!
This is one of the, if not most, important things to discuss with your significant other. Married couples have a tendency to delve deeper into this area, just because all of their finances are legally bound together. Makes sense, right? Well, it also just makes sense for you to delve just as deep – this is a purchase that both of you are making. Let’s say your credit is awesome, but your partner’s payment history is spotty. When you look at a loan together, this can become a large issue and a huge stopper in the process. Talk. It. Out! Have the talk beforehand, and be sure you’re both honest about credit score, payment history, previous loans and the circumstances that surrounded it all.
Not just who pays for take-out when the other isn’t able to cook one night! Actually write out a formal document that outlines:
This doesn’t necessarily mean 50/50 for payments, either. Depending on the income gap between each person, lots of couples decide on a 70/30 split or sometimes even 80/20. Figure out what is going to work for you and your partner specifically. Not all careers pay the same as others; this is the major influence that determines what each party contributes. Get yourself the professional help of a real estate lawyer to draft it out, so it will be legally binding. What you need to prepare for, because we cannot see into the future, is the worst-case scenario. In this case, the worst-case scenario in buying a home together would be having one person split. It may not happen, but we’ve seen what happens when it DOES happen. Remove yourself emotionally when approaching this aspect, so that you can you can include a logical provision to your agreement for what happens in case you two split up. This is not preparing for THE future, this is preparing for ONE POSSIBLE future. We always root for our home buyers; we want you to be happy and successful! If you aren’t, have we really even done our job?
There are a number of legal options available to you in terms of how many ways a couple can “own” a property. We cannot go into to much detail here, since this is something you should discuss with your lawyer. They will have the up-to-date and accurate information on title options!
Seriously, just do it. We understand that couples want to safeguard their finances and keep things separate when first moving in with another, but this is often a misunderstanding of what a joint account is. Now, there’s a few ways to have a joint account set up – and your bank would be the best place to look into that info – but the best account for these separate-money-thinkers is an account that you and your partner can contribute to from your separate accounts. They can’t see your details, you can’t see their details; only what amount is being contributed. Then, your house payments will be extracted from this one account. Honestly, it streamlines the whole payment process, and makes regular use a breeze!
With these things in mind, you now have the knowledge to put your heads together and take the plunge into the financial stages of home buying! It may feel like homework, but you will thank yourself later!
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