Things to Consider before Buying a Home
It used to be that couples first got married, and then bought a home together. No
more! Modern couples no longer consider marriage a prerequisite for buying a
home together. Buying a property together can complicate either a breakup or a
divorce if not considered upfront.
No one likes to think about the end of a relationship, but buying a home is a huge
investment – not only in the relationship but financially. The partners may have
differences in income, down payment, and contributions to the home. In the
event of a separation, how will these issues be addressed? In other words, what
happens if you break up?
The easiest way to ensure that everyone is protected is the title. Most married
couples opt for Joint Tenancy that provides each homeowner an equal interest in
the value of the property. The assumption is that marriage involves a merging of
income and assets.
For couples who plan to keep their finances separate, a better option could be a
Tenancy in Common. This form of title provides each owner with a separate,
transferrable interest in the property. The interest does not need to be equal to
the other; this could give one a larger interest if they contribute more financially.
The interest can also be sold or inherited separately.
Don’t let the excitement of a home purchase keep you from considering the
future. Before closing on that dream home together, consider the exit strategy –
just in case.