If you are preparing to buy a house with your significant other, there are some unique considerations that will apply for you that wouldn't necessarily be a factor if you were married. Understanding the details can help you to finalize the sale in the best way possible for both of you. Here are a few things to consider as you approach the home-buying process:
Consider What Type Of Ownership You Want
When it comes to the final paperwork, you have a few different options for the ownership division. You can opt to declare joint ownership, in which you each own half of the share of the home and the surviving owner inherits the entire property in the event that one of you dies. This may be ideal if neither of you can get approved for the mortgage by yourselves, but you can get approved if you apply together.
You could also opt for sole ownership where only one of you is listed on the deed to the home and has legal ownership rights. This may be a better option if one of you has poor credit or cannot obtain a mortgage for any other reason. However, just remember that the person not named on the deed legally has no claim to the property in the event that the relationship ends, even if they have invested in the down payment or other financial needs.
Percentage ownership, also considered tenancy in common, is defined when one of you owns a greater share in the property than the other. If one of you is more financially sound and is investing far more in the down payment and the other costs than the other party, you may want to divide the property ownership share according to this investment.
Clearly Define Your Contingencies
Because relationships can and do fall apart, and a home purchase is a long-term commitment, it is important that you have contingencies defined for the two of you and the house in the event that the relationship comes to an end. While this can begin as a legally binding contract between the two of you, it can also then transition into a prenuptial agreement once you are ready to tie the knot.
Define who gets the house in the event that the relationship ends. You should also consider what will happen with it if one or the other of you should become disabled. You may also want to include specifics about how the utilities, renovations, and major repairs will be addressed in your new home.