17 May
Source: This post was shared from the Yahoo.com site. 
David Nadelle ·4 min read 
Andrii Dodonov / Getty Images/iStockphoto

The common conception is that many people wait until marriage to buy a home together. However, there are many great reasons to buy real estate with another person, whether they are a spouse or not.As a matter of fact, millennials are leading the way in this regard. A trend is emerging wherein those who are unrelated or unmarried are purchasing homes together: the number of co-buyers with different last names rose a staggering 771% between 2014 and 2021, per The Wall Street Journal.

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Divorce is an unpleasant reality for many married couples. But in the event of a split, there are detailed compensations decreed by prenuptial agreements and divorce laws. However, when you buy property with someone who isn’t your spouse, there are extra risks you’ll need address before you make this big purchase.Here are five actions unmarried home buyers should take to protect themselves when navigating the purchase of a property together, particularly to avoid unnecessary conflict in the case of a real estate/relationship breakup.

1. Get Your Finances In Order

Exchanging salaries, debt information and credit scores will determine what each partner can bring to the table throughout the property buying and homeowning journey. Knowing how much each person will be contributing to the down payment of a property — and how much each will receive if the property needs to be sold — are key financial considerations and have to be agreed upon (and preferably put in writing).As Realtor.com indicated, many couples are apprehensive to put anything in writing for fear of causing hardship to the relationship. “When people get together like this, they don’t want to put it in writing, because it’s awkward.” said David Matthews, a partner with Weinberg Wheeler Hudgins Gunn & Dial in Georgia. “Preferably have it [document signing] witnessed. Map out how things are going to be done, and who owns what.”

2. Prepare a Property Prenup

Before a property sale closes, co-homeowners should have a legal contract, often referred to as a “cohabitation agreement,” drawn up and signed. These property prenups should cover all relevant questions pertaining to dividing property, utility bills, major repair payments and mediation measures that need to be taken in the event of a breakup.“When unmarried couples buy a home together, they can’t do it on a handshake,” stated Matthews. “Because in almost every state, if you have an agreement regarding real estate, it has to be in writing. It doesn’t have to be a 40-page formal document drafted by a professional lawyer, just an agreement about how things are going to be divided.”

3. Decide on the Deed…

According to MyMortgageInsider, there are three ways to “take title” or delineate who will be listed on the deed:

  • One person can hold the title as sole owner.
  • Both people can hold title as “joint tenants.”
  • Both of you can share title as “tenants in common.”

If only one name is recorded on the deed, that person has all the responsibilities of ownership. Joint tenancy is just that — both parties own half the property and if one should die, the survivor get sole ownership rights to the real estate. Being tenants in common dictates the passing of one’s ownership share to designated heirs or those named in a will or trust.

4. …And Mortgage Liabilities

While qualifying for a joint mortgage can benefit a couple wanting to combine their incomes and get a bigger loan, applying for a mortgage as co-borrowers can sometimes work against a couple. If one person has a much lower credit score than the other, it could negatively impact your chances of being offered a favorable mortgage.Most unmarried partners generally apply for mortgages as individuals. By comparing credit scores, employment statuses and debt-to-income ratios, it should be easy to identify which partner will be able to get the best mortgage terms and rates. Without other agreements in place, the sole mortgage holder will keep the home if a breakup occurs.

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5. Have a Buyout Strategy and Selling Price

As Forbes noted, cohabitation typically ends when one half of a partnership moves out or passes away. Having an agreement in place to define how one partner can buy out the other — or establish how the property will be sold — will remedy headaches should a breakup situation arise.Additionally, using a qualified appraiser to settle a fair market buyout price or purchase price could be valuable. If a decision on price can’t be agreed upon, an appraiser will be able to arrange the help of a licensed third-party valuator to make the determination. Should both parties decide to sell their property, there should be an agreement detailing how the profits will be distributed based on who took on mortgage payments and house-related work.More From GOBankingRates

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