buying a house before marriage
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Buying a House Before Marriage {How to Protect Your Investment}

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Buying a house before marriage with your partner might be tempting, but you should carefully consider all factors before jumping into homeownership. As a Realtor®, my job is to sell homes and I love selling to couples in love!

I’m going to share why you should probably not buy a house together before getting married and what should consider doing instead.

The idea for this post was sparked by a conversation in one of the personal finance groups I’m a part of on Facebook.

The original poster asked,

“I need some advice. I’m on BS2 with $12k left on student loans and $36k left on a truck, student loans will be paid off soon. I have the opportunity to buy a house that is valued at $335k (I live in a very high cost of living area) for closer to $280-$290k. The equity in the house would then become part of my down payment so that would immediately give me 45-55k for a down payment plus I have about 20k in savings to put on top of that. What is the groups collective thoughts on this?

A little more info, my boyfriend and I would be buying the house together, we already are paying the mortgage payment on it as we are renting it. Together our income is $155k a year

And yes I am Dave-ish and no I won’t sell the truck it is my pride and joy and it is my reward for following my dream career.”

Ok. Let me break this down for you if you don’t understand the language she’s speaking. This is a group for students of the Dave Ramsey Baby Steps and Financial Peace University.

BS2 is Baby Step 2, meaning she has completed Baby Step 1 (saving $1000 in a starter emergency fund) and is in the process of paying off her debt. (BS2)

There are a number of things that alarm me about her question, and I’ll share my response at the end of this post, but I want to share why buying a house before marriage might be a really bad idea.

buying a house before marriage
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Related Posts if You’re Considering Buying a House with your Boyfriend or Girlfriend:

Your home purchase is, without a doubt, the biggest expense of your life (in most cases).

While my job is to sell homes and I enjoy making money, buying a house before marriage is not something to jump into without careful consideration.

You’ve worked hard to build up and maintain your credit score, and the last thing you want is to risk it with a poor financial decision.

Back to the original poster’s question:

Should I Buy a House with my Boyfriend?

This was my response:

I’m not sure if another Realtor® has chimed in, but I’m licensed to sell real estate and I’m also a personal finance blogger. I was a banker for 8 years and have been in the financial services industry for a total of 14 years.

You asked for advice, and I didn’t read what everyone else recommended, but here is my two cents:

RE: Buying a House Before Marriage

1. I would not buy a house with your boyfriend.  This is basically like co-signing on a loan (or someone co-signing for you), which I would NOT suggest.

When you buy a house with your partner before marriage, you aren’t protected by property laws. You need to consult an attorney before you even consider this investment.

What happens if you break up? Who gets the house? There are too many legal questions that could cause a heap of problems if you don’t have a legal agreement drawn up prior to closing.

What happens if one of you dies?  It depends on how you hold title. In a joint tenancy with rights of survivorship, you both would hold an equal title and if one of you dies, the other inherits that share of the property.

When you hold title as tenants in common, each person holds a percentage of the property and when one person dies, their interest in the property goes to the estate.

A partnership agreement is another way to own the property. In this case, it’s like a business transaction and the agreement states exactly what is to happen with the property ownership upon disability or death of one or both parties.

When you purchase a home together, you’re usually doing it because the extra income helps lower your debt to income ratio, making it easier to qualify for a more expensive home.

Ask yourself this question: “If we split up next year, will either of us be able to afford the home on our own?”

If the answer is no, consider buying a less expensive home in your name only (or vice versa). In a split, someone always leaves. But there isn’t the battle of who gets the house when only one person is listed on the deed and mortgage.

I know what you’re thinking. It’s cheaper to buy than to rent.

Blah Blah Blah…

That’s an absolute myth about housing.

Speaking from experience, as someone who bought a house and relocated across the country before we were able to sell it, having to rent it out to tenants who didn’t pay on time, and eventually having to put a brand new HVAC and ducts in the house (to the tune of $12,000), it is NOT cheaper to buy than rent…even if you live in a high-cost area.

2. It sounds like the seller is offering owner financing which I’m not a fan of at all. There are a lot of risks for both parties when doing owner financing. Your loan should be backed by a financial institution if you’re going to buy.

Most people don’t just sell their house for that much less than market value because they’re good people. There’s something underlying here that worries me.

3. If you have $20,000 for a down payment, you can easily pay off your student loans and pay a hefty amount down on what’s owed on the truck. If that’s all you have left, you should be able to knock that out super quick using the debt snowball method.

You’re already renting the house you want to buy. Why drain your savings to buy it? There’s no way I’d recommend this. If you’re going to do it anyway, at least speak to an attorney and get solid legal advice about how to protect yourselves and your investment.

You have such a great income that I’d rather you rent a place for $2,000 per month than purchase this property with your boyfriend.

But what do I know? I’m just a greedy Realtor® ????‍♀️

 

 

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