When a relationship is moving forward, it’s natural to think about building a life together. That often means buying a house as a couple.
While buying a house with a spouse or partner can boost your buying power, Milan Griffin, Chief Operations Officer of HomeFree-USA, warns that there are some risks you should first consider. Here’s what you need to know to protect the financial interests of both of you.
Your partner’s credit could hurt you.
While you may be able to afford a more expensive house with two incomes, the lender will also consider the credit risk each of you presents. If one of you has a low credit score, you may be offered a higher interest rate or not qualify for a mortgage at all. A Homeownership Advisor can look at your unique situation and help you determine whether it makes more sense for you and your partner to apply for the mortgage together, have one of you apply using your credit and income only, or wait a bit so you can both improve your credit.
Buying as a couple could limit your access to free money.
Downpayment assistance programs provide free money for you to use for the downpayment, closing costs and other homebuying fees. But many of these programs are based on income and household size. By buying with a partner, you may not be eligible for certain programs that you would qualify for by yourself. A Homeownership Advisor knows about a wealth of downpayment programs and may be able to help you find one that you can qualify for.
There’s a risk if you and your partner part ways.
While all of us like to think our relationships will last forever, statistics show that one in three Americans who have been married have experienced a divorce. If you’re not married, the risk of separating is even higher. If you break up, one partner may have to buy out the other. If you can’t afford to do that you may have to sell the house and split the proceeds. If you’re not married, you may want to establish a cohabitation agreement – a legal document that states how much each partner will pay toward expenses, who will own rights to furniture and other property purchased jointly, and what will happen to the property if the two of you break up.
It’s a blessing to be able to share a home with a partner. Make sure you protect your future home and your peace of mind so the two of you can continue to grow together.
