Buying a home that they can call theirs is one of the loftiest “relationship goals” out there. In fact, a lot of couples already invest on a house even before they tie the knot, if they even have plans to doing so in the first place. However, just like the concept of living in together itself, there are a number of problems that such couples may face when getting their home. People such as mortgage brokers have seen this scenario multiple times, and there are more than a few instances that such transactions went ugly. Here are some potential problems unmarried couples may face when getting homes.
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This may cause conflict within the relationship, but the couple should check each other’s credit history before committing to a house purchase. This is because even if you apply for a loan together, you are assessed by brokers as 2 individuals instead of a couple. Even if just one of the 2 individuals have a bad credit score, it can make it more difficult for them to get a favorable loan. They may be required to get a loan with a higher downpayment or a more expensive interest rate, if their loan is even approved in the first place.
Distribution of Payment
Another thing that can pose a stumbling block for an unmarried couple trying to buy a house is how they are going to split up the payments. This is especially so without the legal protection marriage provides. So what is the best solution for this problem? The best way to do it is to come up with a legal contract. Both parties can come up with an arrangement that’s amenable to both parties (hint: it need not be 50/50). Aside from the distribution, the contract should also contain what to do in the event of a breakup.
There are multiple ways for an unmarried couple to own a property. You will need to tell each way apart from each other so you can come up with the best title available. A “sole owner” title places only one person as the owner of the property, giving them 100% of the property’s equity. A “joint tenant” title gives either party 100% ownership of the property should the other person dies. A “tenants in common” title means that the partner doesn’t automatically receive full ownership of the property should death happens, but instead his/her heirs will get the rights to the deceased’s shares.
Keeping Payments in Sync
Mortgage brokers in Bradford would tell unmarried couples that they need to find a way to keep their payments in sync with each other, as together they only make one payment. To ensure proper flow of payment, it is suggested that the couple should open a joint account. Some may be hesitant at this setup given that they are unmarried, but this serves as the best means to ensure that the bills get paid. Regardless if you’re paying off the home loan or the bills, a joint account helps a lot in keeping payments running smoothly.
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