Getting Married and Buying a Home?

Here’s What You Should Know

You’re embarking on one of the most exciting times of your life. You and your fiance are planning a wedding and a life together. Wanting to buy your first home and embark on the new journey is common. Perhaps you’ve found the perfect house but the wedding is still months away. If you wait, you risk it going off the market or someone else snatching it up before you can.

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About 25 percent of millennial couples bought a home with their spouse before the two were married. There are some risks involved with buying a home with someone before you tie the knot. Here are some things you need to keep in mind to avoid potential legal hassles and protect yourself and your future spouse.

1. Plan a Budget

You’re meshing two households and two incomes, so your expenses will go down, but take the time to sit down as a couple and plan out your budget. Knowing how much money you make together and what your current bills are, including any student loan payments or other debt, makes it clear just how much of a house payment you can afford. Most couples start off in a much smaller home than they’d like so they aren’t house poor. Remember to factor in elements such as yard maintenance, home repairs, insurance and property taxes.

2. Watch Out for Costly Flaws

This might be the first time you or your future spouse have purchased a home. There are a lot of things you need to look out for, such as flaws in a home that lead to costly repairs. Check the age of big updates, such as the heating and cooling unit, windows and roofs. How outdated is the kitchen? Make sure your prospective husband or wife is able to live with the house the way it is until you can save up money for a remodel.

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3. Consider Your Fiance’s Credit Score

When you buy a home before marriage, you are typically rated as individuals and after marriage as a whole unit. If one of you has a poor credit history, buying a home together before you’re married may be easier than after. One person can serve as the co-signer and effectively raise the other person’s credit score if payments are made on time. However, before you jump into buying a home, take a hard look at why the person’s credit score is so bad. What will change once you buy a home together or should you wait and rent for a while until credit history improves?

4. Sign a Legal Agreement

Even though you might think you will never part from your significant other and that your lives will be perfect, go ahead and take the time to sign a legal agreement for what happens if the worst happens. What if the other person passes away unexpectedly before the wedding? With spouses, the property typically goes to the surviving spouse. If you aren’t married yet, this isn’t always the case and the other part of the couple could be forced to sell the home.

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What if you split up before you exchange vows? How is that situation handled? Think through all the potential scenarios and protect one another with a binding document that spells out requirements.

5. Decide How to Divide the Down Payment

You may be in a relationship where one person has a significant amount in savings and the other doesn’t. Figure out the best way to handle the down payment on the home and if equity should be divided accordingly. For example, if one contributes $15,000 toward the down payment and the other only $5,000, are monthly payments handled differently to accommodate the additional money put in by one partner? Perhaps you divide the equity in the house into quarters with three-fourths going to the first person and one-fourth to the second.

It’s Okay to Wait

You have a lot on your plate. Weddings notoriously go over budget and buying a new home is stressful and financially draining. It’s okay to pause for a few months, get married and then seek out a home you’d like to buy together. While there are valid reasons for buying a house now, there are also valid reasons for waiting. Only you and your fiance can decide the best course of action to meet your needs.

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