If you and a co-signer are going into the home buying process outside of a marriage, you should consider some important factors before both of you put your names onto the paperwork.
In 2017, about 16% of first-time homebuyers were unmarried couples, a number that is continuously on the rise. But, things can change, and there are certain aspects you need to keep in mind (and at heart) when buying a home with someone who isn't your legal spouse.
1. Sign a prenup.
Many people don't realize that prenups apply even outside of married relationships. You and your loved one can sign a prenup for the house to protect both of you in the event that you breakup. Obviously, no one wants to consider this possibility, but it's the smart thing to do. This agreement should answer these questions: What happens to the property in the event you separate? What if one of you dies, or becomes disabled? Who will pay for major repairs? Who is responsible for associated bills that go along with owning a home?
If both of you are truly in it for the long haul, neither of you should have any reservations about signing such an agreement.
2. Choose the right title.
There is, in fact, more than one way to own a home. Picking the right type of title is essential for unmarried couples. The primary option you have is sole ownership, which means only one name will appear on the deed. This person has all rights (and responsibilities) associated with home ownership. The cons? If you're not the one on the title and the relationship ends, you'll walk away with nothing even if you have contributed to the home over the years.
Joint tenancy is another option, which gives each of you 50% of the home. However, if you break-up and the other partner cannot buy you out (or won't), it could cause trouble.
"Tenants in common" is another title option that gives unequal ownership rights. For instance, you might have 75% while your partner has 25%. The ownership share can be tailored to match the financial contributions of each person to the home buying process.
3. Try to filter out opinions.
This last tip can be very difficult, but many family members and friends will have their own opinions about the couple's decision to buy a home that will make the process all the more stressful. Even if they aren't trying to dissuade you, if everyone is trying to weigh in on what you should (or shouldn't) do, it can just add more confusion to the mix that you do not really need.
When buying a home, you should only ask the opinions of those who matter most to you. And you should only ask the advice of a professional who knows what they are doing. Anything else that is said should be taken with a spoonful of salt.