Buying a home as an unmarried couple is an exciting endeavor, and if statistics are to be believed, it is increasingly becoming the norm. Even with the pandemic, 9 percent of new home buyers in 2020 were unmarried, and that figure rose to 11 percent in 2021. Joint ownership also jumped to 16% in 2021, from less than 3% in 2020-probably the clearest sign of the changing home ownership dynamics.
Renting two apartments at once can get expensive fast if you consider that couples may spend considerable amounts of time in the same house. This means that a couple may find themselves paying rent in a house they barely occupy. Many couples choose to combine their housing rental expenses into a single mortgage. This strategy makes more economic sense for some, as it channels the money to more productive uses.
Combining expenses and channeling them towards ownership is a better model than renting without the eventual ownership of the property. Establishing equity in a property helps lay strong foundations for a sound and more certain financial future.
Renting comes with a lot of restrictions on what can or cannot be done on the property. Afterall, as a renter, that property is not yours, so you may be limited as to what you can do to the property to increase your quality of life.Even worse is the notion of dumping money into upgrading a property that does not belong to you, where the upgrades and any increased valuation to the property end up benifiting the owner and not you. Owning a property allows you to make a home out of a house and also make customizations that could increase the value of the house in ways that benefit you and not the owner/landlord.
While it may be taboo for couples to discuss breakups, it is a necessary subject if you plan on owning a property together. Having a co-ownership agreement or ratifying it in your prenuptial agreement with professional legal support makes it a simple issue to address in the event of a split.
The agreement should include fundamental provisions, such as what happens to the property in the event of a divorce or even death, as well as how bills will be paid. Whereas a wait-and-see attitude might lead to disaster, having an agreement in place makes everything go more smoothly.
There are three primary scenarios through which unmarried couples can be legal owners, or hold title to a property. The entire property can be owned by an individual if they drew the mortgage in their name in a sole ownership. However, both partners can own also the property as joint tenants in a joint ownership with survivorship rights. This implies that they share equal ownership and one party takes full ownership if the other dies.
Joint Tenancy is another highly practical alternative that is commonly chosen by partners who own uneven portions of the property or who do not want to rescind their ownership to the partner if they die.
Homeownership is a firm commitment and it is critical to understand that the responsibility is yours, no matter the outcome. Have a deep understanding of not only your financial situation, but also your partner's financial standing. Openly discuss your approach to bills and homeowner expenses like insurance and property taxes before hand, to minimize any risk to your shared future financial health.
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