How to buy a home with your significant other

February 08, 2022

For some, homeownership happens before marriage. Get a complete checklist of the steps to take if you're buying a house with your partner.

 

Diving into the homebuying process can be daunting-yet-exciting. If you’re looking to buy a home with your significant other, there are a few more risks than if you’re married. However, if you and your partner can make an informed decision on titling and write a contract together, you both might be able to manage this risk.

 

First-time homebuyer tips for unmarried couples

Strange as it sounds, if you’re not married, banks treat you and your significant other like joint partners in a business deal. This is a key difference for unmarried couples. If you understand this, you can protect yourself against adverse circumstances. This checklist will help you and your partner focus on the important financial aspects of your first-time home purchase.

 

As you get started

  • Review your finances: Look at your bank accounts as well as brokerage and mutual fund accounts. Then, consider any debt you have. Develop a plan to make the purchase both fair and realistic for both you and your partner.
  • Compare credit scores: You may get a better mortgage rate if only the person with the (substantially) better credit score applies. Talk to your mortgage banker if you have any questions. 
  • Save for a down payment: Often this is 20 percent of the total cost of the home, but not all loans require that much down.

 

During your search

  • Agree on a final price and total budget: A mortgage calculator can tell the monthly payments needed for different priced homes. When looking at homes, also consider: can you afford updates if needed?
  • Make sure you’re aligned on location, style and size: You can always repaint the kitchen, but you can’t change how far you are from family and friends.
  • Decide on a mortgage plan: While you may get a better rate if only the person with better credit applies, you’ll be more likely to secure a larger loan amount if you both apply (assuming you’re both regularly employed).
  • Get prequalified for a mortgage: Prequalification from a lender will tell you the maximum mortgage you qualify for.

 

Before closing on your home

  • Budget for closing costs: Originating a mortgage and transferring ownership can cost in the thousands. This may include origination charges, title transfer taxes, title insurance fees and inspection fees. 
  • Decide on titling: “Sole ownership” on the title means only one of you owns the home; “joint tenancy” means you and your partner own the home equally and if one of you dies, it passes to the other; “tenants in common” lets you specify the share of the home each partner owns — and who gets it upon passing. 
  • Draw up a legal contract: The future is unknowable, but a legally binding plan can save you both future headaches.

 

As you’re moving in

  • Plan for upgrades and new furniture: Having contractors in your home will be less stressful before you’ve actually moved in; talk through the upgrades and any major furniture purchases you and your partner will need for your new home. 
  • Open a joint bank account: This is one of the easiest ways to share home ownership expenses and save together. Consider auto deposits so saving becomes second nature.

 

Buying a house looks different for everyone. Find out how one couple bought an investment property as their first home.

#ToughMoneyTopics don’t stop there. Read on to learn about child care costs.

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.

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