You and your partner do not necessarily have to wait to get married to buy a home. Many couples make the leap without formalizing their relationship. However, it is important that both of you take steps to protect your asset and credit history. If you are considering buying a home with your partner, here are some tips to keep in mind.
Talk about Your Credit
One of the biggest mistakes you and your partner could make is to not take the time to talk about your credit before you start seeking preapproval for a home loan. Unfortunately, some unmarried couples put this conversation off until marriage or some other point in their relationship. Not knowing your partner's credit history though could hurt your chances of getting a loan.
Even if you have a good credit score, you could be penalized if you are buying a home with a partner who has a poor credit score. The lender will evaluate you and your partner as a couple and because of his or her poor credit, both of you could be seen as a lending risk. You and your partner could face a higher down payment or interest rate.
The lender could even turn you and your partner down altogether. Even though you could likely qualify for a home loan on your home, the addition of your partner's poor credit history could be harmful to you.
Decide on the Deed Options
You and your partner have a few options when it comes to deciding on how the ownership is stated on the deed to the home being bought. One of the options is to only list one person on the deed. It is important to note that the person who is not listed would lose any rights to the home even if he or she is helping to pay the mortgage.
A better option for protecting both of your investment into the property is to opt for a joint tenancy. Joint tenancy means that both of your names will be listed. After the death of you or your partner, the property would be solely owned by the surviving partner.
If you or your partner want to name a beneficiary to inherit a share in the home, tenants in common would allow that.
There are many other considerations that need to be made when buying a home with a partner. Work with an experienced real estate agent to learn more about what you and your partner should do to protect the investment as you start looking at homes for sale.
