Buying a home should be regarded as a major business decision by unmarried couples in order to avoid issues that may later arise once the home is bought. This article discusses some of the crucial mistakes that unmarried couples can avoid if they treated buying a home as a business decision.
Not Discussing Each Other's Credit History
Mortgage lenders are likely to assess each of you separately in order to determine how much can be lent to you during the home purchase. Those lenders may base on the person with the lowest credit rating as they decide the maximum amount that you can borrow.
It is therefore helpful for you to discuss each other's credit history before you approach the lenders. Any issues, such as an overdue loan repayment, can then be fixed so that a favourable assessment is made once mortgage lenders are approached.
Not Drawing Up an Agreement
Unmarried couples should never buy a home until they have agreed, in writing, about various issues affecting that home. For instance, you should agree on how much equity each of you will have in that home. Such a clause will avert any problems that may arise in case you separate and have to sell the home in order to share the proceeds. Protect your interests as you buy this home in the same way that you would protect your interests if you were starting a business with another person.
Not Exploring All Title Options
It is a mistake to go for one title option, such as joint ownership, without considering the other options, such as tenants in common, available. This lack of research can deny you the benefits that would have resulted from choosing a title option that is better suited to your needs.
For example, selecting to own the home as tenants in common can allow your children from a previous relationship to inherit your share of the property in case you die. Joint ownership can deny your children that benefit because your share in the property automatically reverts to the surviving partner.
Not Setting Up a Joint Account
It isn't advisable to pay for the mortgage separately because the process gets complicated if payments come from different sources. It is much better for you to set up a joint account into which each of you deposits his or her share of the monthly payment. The mortgage deductions can then be automated in order to avoid issues that can arise from the late payment of those installments.
Buying a home as an unmarried couple is a matter that needs careful consideration so that preventable mistakes are avoided. It is therefore prudent for you to consult a real estate expert, such as an attorney, for advice so that you make the best decisions during each step of the home-buying process.Share