Buy a Home or Get Married: Which Should Come First?
Buying a home is not a simple decision regardless of your marital status. Couples who are not married may wonder if investing in a home together before or after their nuptials is the best choice. There is no right answer because it will always depend on other factors including your finances, credit scores and future plans. Below is a summary of things to keep in mind as you make your decision.
The most important thing to remember when purchasing a home is that the bank will view married couples as one entity and unmarried couples as separate individuals. What this means is that when married couples apply for a mortgage, both of their incomes are used to determine approval. Whereas unmarried couples have to both individually qualify for a mortgage in order to purchase a home jointly.
If something in your relationship goes awry, it is much easier to separate the equity, title, payments and other particulars if you are unmarried. As long as a written agreement is created and signed beforehand by both parties, division should be rather clear cut. On the contrary a married couple will have more legal issues to go through not only with the property and mortgage but also with the actual divorce itself.
Credit scores will play a role in mortgages regardless of your marital status. Since unmarried couples are treated as individual applicants credit scores are important. In this case the person with the better credit may have to be the sole applicant but be sure if you go this route to put all legal terms and decisions in writing. For married couples, a spouse with poor credit can significantly affect a mortgage process. In this case, it may also be better to have one spouse apply.
Keep in mind only one income will be used in the application. One way to increase a spouse’s credit is to have them as an authorized signer on your credit card so that as you gain credit by paying payments on time, your spouse will too! You can also choose to wait a couple of years to apply for a mortgage and make it a goal to help your spouse increase his or her credit score!
Additional Things To Consider
What are your savings like? Closing costs and down payments are usually needed to get a mortgage. Do you each have enough individually or do you need to combine them? If unmarried, keep with the trend and put all contributions in writing.
What will the property title say and what will be the course of action if you part ways or one of you passes away. If unmarried, who gets the property and how will equity be divided up. A married couple generally has the arrangement where if one person passes away the spouse can have the title transferred easily into their name.
Take some time and consult with a professional to help shed some light into your personal situation. The decision to purchase a home married or unmarried is not a quick decision but with the above information you will soon be able to enjoy the excitement of house hunting for your new home!
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