Guest Writer: Sally Norton
Featured image-Wedding preparations with lawn chairs in front of decorated gazebo.
Many couples struggle with how to make the best decisions on the road to owning property together. Buying a home is one of the most exciting and stressful experiences in one’s life, and a house is one of the most expensive assets most people own. Purchasing real estate is almost always a wise investment, but it’s also a huge commitment. With all of the decisions young couples need to make regarding marriage and their future lives together, the stress of buying a house might seem overwhelming. However, we recommend taking your time and thinking carefully before making any decisions. In this article, we will offer some advice about buying a house before vs. after marriage: what to know and how to prepare.
What other couples are doing
Sometimes you can get inspiration and ideas by looking at what other people are doing.
1. Buying a house before marriage
Contrary to what this generation’s parents did, many couples nowadays are deciding to buy a house
before getting married. People can decide that they want to spend their lives together and then start
planning their mutual finances. One of the main reasons unmarried couples choose to buy property
together is that they would rather pay off a mortgage than keep spending money on rent. The concept
of having a sizable mortgage might seem daunting, but modern couples choose to look at a house as a
mutual investment toward a stable financial future.
Most couples wait until after marriage to buy a home together.
2. Buying a house after marriage
This still represents the more common situation for several reasons:
● More time to consider options. Finding the house of your dreams is never easy. Sometimes people don’t even have an exact idea of what they want, and some additional time to get their visions aligned is often welcomed by many couples.
● Making future plans. There are many details to plan, like where the couple would like to live, how many children they would like to have, and by extension, how large a house they will need. Making plans and figuring things out takes time.
● Stabilize finances. Even people with stable and high-paying jobs need some time to get their finances in order. Buying a house requires a down payment, so couples who realize they want a home together need some time to save up the money.
● The stress of planning the wedding. Couples who are yet to get married often find that planning the wedding itself is stressful enough. A common theme is delaying the stress of buying a house until they are done with the wedding plans.
The relationship status may affect the credit score
Perhaps one person in the relationship has a significantly better credit score than the other. In that case, it makes sense to buy the home prior to marriage. Credit scores can directly impact mortgage rates, and it’s good to know what kind of mortgage rate you will be facing. On the other hand, married couples may have a better debt-to-income ratio together.
But the mortgage isn’t affected by relationship status
Qualifying for a mortgage isn’t affected by marital status. Financial institutions are required by law to make credit equally available to customers since marital status is a protected category. The Equal Credit Opportunity Act ensures that approval criteria are going to be the same regardless if you are married or not.
In the case of a breakup, one person can buy out the other.
What happens if you split up
In case the unfortunate does happen, and the couple splits up or gets a divorce, there are two main options:
● Sell the home and split the proceeds.
● One person buys the other out of their share of the home.
While neither of these is especially appealing, it is always good to know your options and what to expect.
Ownership is separate from the mortgage
Even if the mortgage is listed only on one person, both partners in the relationship can be listed as owners on the deed.
This can be a good option for couples who decide to buy a house before marriage.
● Sole ownership – offers complete control of the property. This can be applied even for married couples if one spouse removes their ownership interest of the property. In that case, it is recommended to designate ownership in a will since no one else can act on the property.
● Joint tenancy – more than one person can have rights on the property. Provides an option for both married and unmarried couples to allow both partners co-ownership. Partners will be able to share assets and debt.
Choosing the right location
Once you decide you want to purchase a house together, you should focus on researching local laws and regulations. Things can differ from state to state, and for example, Michigan property and tax law states that you must include gifts of cash or expenses paid on your behalf in the total household resources. Wherever you decide to buy property, we recommend you roll up your sleeves and read up on the local tax policy.
When it comes time to move in, you might need help from a moving company and storage services for the extra furniture.
Moving into a new home together
Unmarried couples who are currently living in different locations will probably need to plan the move carefully. Regardless if you are relocating within Michigan or moving across state lines, you will need help with the transfer to your new residence. Couples who were living together prior to purchasing a house will have an easier time regarding furniture and other possessions. However, couples who are buying a new home and moving in for the first time might realize they have more furniture than they can fit inside. Luckily, you can ask your moving company if they have additional services like packing or storage units.
The bottom line
Buying a home with someone is a beautiful way to build a strong future together. Many young couples choose to first focus on homeownership and leave marriage aside until they secure their mortgage. Other couples appreciate the extra time and try to delay the stress of buying a home until they have tied the knot. Married or not, it is always advisable to make responsible financial decisions. We hope this article helped in your research on buying a house before vs. after marriage.
Jason Gelios is a Husband and Father. After that, a Top Producing REALTOR®, Author of the book Think like a REALTOR®, Creator of The AskJasonGelios Real Estate Show and an Expert Media Contributor.