The Mortgage Advice & Options Un-Married Couples Need to Know
This is such a great blog post by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
Out here in California, average home prices in Santa Cruz, the Silicon Valley and San Francisco are between $1 million and $1.75 million, I have a LOT of buyers who aren't married and I bring up these same points for them to figure out together.
The Mortgage Advice & OptionsUn-Married Couples Need to Know
It probably comes as no big surprise, when it comes to the housing market, the younger generations make up the largest percentage of home buyers.
The following statistics from the National Association of REALTORS® Research
Group April 2019 Report proves that to be true ...
- Millennials made up the largest share of home buyers at 37%. (Breakdown: Older Millennials (Ages 29 yrs to 38 yrs) made up 26%. Younger Millennials (Ages 21 yrs to 28 yrs) made up 11% of the shares reported)
- 86% of Younger Millennials and 52% of Older Millennials were first-time homebuyers
But the info that caught my eye, in particular, is the significant percentage of homes reported as being purchased by buyers that are unmarried couples.
- 8% of those homebuyers reported in the NAR Report were unmarried couples. The highest share of unmarried couples being found in the 28 years of age and younger age group.
- Supporting statistics from a recent Coldwell Banker Marriage and Homebuying Study show that 25% of Millennials purchased their home with their current spouse prior to being married. (That number has grown rapidly, as in 2015 only 1 in 5 buyers were unmarried couples)
My own client database backs-up these reported statistics. The number of calls and inquiries I've received from unmarried couples (and single homebuyers) has grown over the last few years. I have found ... that despite the additional concerns sometimes confronting young unmarried couples when buying a home ... they are choosing to buy homes together in larger and larger numbers.
What advantages found in homebuying are compelling young unmarried couples to take this action in larger number?
- Buying with someone, regardless of marital status, improves home affordability
- With rent costs on the rise, 2 incomes expand the opportunity to buy a home
- 2 incomes expand the opportunity to save a downpayment
- 2 Credit Reports and 2 sets of Credit Scores can be considered for Mortgage Application
- The likelihood of being approved for a mortgage and a larger monthly payment is typically greater
- There is a joint responsibility for expenses such as utilities, etc.
But there are some challenges to buying in this manner too ...
There are differences in HOW un-married couples must complete a mortgage application versus those of their married counterparts. While simply addressed, those differences must be thoroughly explained by a lender and then equally considered by un-married mortgage applicants.
But beyond those more "mechanical" differences in application and process, there are other considerations it is wise to proactively address by those considering purchasing and financing in this manner.
With so much on the line, it's vitally important that all those considering this type of home purchase fully educate and protect themselves. A long honest conversation between all parties involved is called for prior to taking any action, prior to signing any contract to buy or applying for mortgage financing.
It is my recommendation to my clients hoping to buy in this manner, that they secure the services of a real estate attorney at this time. It is a sound decision and action to take.
An experienced knowledgable real estate attorney will help the buyers navigate all the issues specific to this type of home purchase. Then they will assist them in taking actions to protect themselves.
What should be discussed at this time?
It is suggested that these issues should be discussed and/or resolved ahead of time:
- Credit and Financial Health (Credit Scores directly influence mortgage options, interest rates, borrowing capabilities, etc. Be upfront and completely honest, as all will be revealed at the time of mortgage application. Go to: www.annualcreditreport.com to receive a free credit report)
- What percentage of the house each party owns
- What happens if the friendship/relationship dissolves?
- What happens if the couple marries?
- What if someone dies? (Who receives their share of the home?)
- What if someone becomes disabled?
- What if one of the parties wants "out"?
- Who and how is mortgage financing applied for?
- How are monthly costs and responsibilities to be split?
- Who claims real estate tax benefits?
- How are needed repairs covered? And by whom?
- Who sees that the monthly mortgage payment is made?
- How are disputes resolved?
- How and Who will you hold title to the property? (Options may vary depending on the state you live, but options are typically: Joint Tenancy, Tenants in Common)
- More ...
As uncomfortable as broaching the topic may seem, it's wise to consider undertaking a legal contract between parties ... a "prenup" if you will ... before starting the home buying or financing process. Rules and actions for all parties involved in the purchase are resolved ahead of time this way and everyone involved is protected.
Then after these actions have been taken you can begin your home buying journey with peace of mind and knowing you are well-protected. Your lender will be able to review and find your best financing options.
If you are ready to take these home buying steps anywhere in the Chicagoland area - or Illinois and Wisconsin, reach out to me today @ www.genemundt.com.
Together, we'll research all your mortgage options and decide which serves your needs best moving forward. And, as always, I suggest that my customers consult legal advice for all matters real estate related (understanding that NOT ALL transactions or states require or involve attorneys).
* Hoping to buy or refinance a home or investment property in New Lenox - Will County or elsewhere in the Chicagoland - IL - WI area?
Contact me today.
I'll put my 40+ years of mortgage experience hard to work on your behalf.
I'm easily found at:Gene MundtMortgage Lender - NMLS #216987 - IL Lic. #0006220 - WI LicensedAmerican Portfolio Mortgage Corp.NMLS #175656Direct: 815.524.2280Cell/Text: 708.921.6331eFax: 815.524.2281
Gene Mundt
Mortgage Originator - NMLS #216987
IL Lic. #031.0006220 - WI License #216987
NMLS #175656
Gene Mundt, Mortgage Originator, 40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking: #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including: The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin.
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