I want to buy a house in the next couple months and even though my partner and I are planning on getting married, we're not married yet. Should I buy the house alone or should he and I buy it together? I'm planning on putting down the entire down-payment.
This question came in today from a reader and it's so simple and yet so not simple, so let's dive in.
I bought a house with my boyfriend so I've touched on this topic before. What I haven't done is broken the different options down in detail so I'm going to do that now.
Whenever I talk about money and relationships, I try to cover all three elements: Emotional, Practical and Legal. I've noticed that most people think about 1, maybe 2, of these elements when they make financial decisions and then are blindsided by the 3rd element which they've ignored but which still has huge importance.
The most important thing here is that we protect both the relationship and the finances, giving each of them equal attention.
The Emotional
Why are you buying a property? Is this a rental property or a "forever" home? Is your partner going to be okay living in a home that is not his? If it was entirely up to you, would you prefer to own the home alone or together? What does your partner want?
My experience is that this is where many couples stumble, with one person assuming they will at some point get partial ownership of the house and the other person thinking, this is my house. I have seen many couples struggle with this, which has led me to believe that shared homes should be purchased together, and real estate investments should be purchased separately.
The Practical
Practically speaking, you want to make the house as easy as possible to divide if you guys split up (this is true even if you get married and then divorced). That means if you buy the house together, you should have a plan for dividing it, such as who gets first-dibs on taking full ownership and what would be the terms of the payout to the other person? Would you pay to have the house appraised? Can one of you force the property to be sold?
From what I've heard, it can be difficult and expensive to add someone to a title and loan after purchase (though I know people who have done this), and it makes it a little confusing who owns the equity (i.e. if you buy a house for $250K and the value rises to $300K and he gets added to the title and loan then, does he get to share in that $50K appreciation, or would you consider that yours?).
You also want to think about repairs and improvements. If you plan on adding him to the title and deed, you might want him to share in the cost of the repairs and improvements NOW, before he's even been added. But from his standpoint, that wouldn't really make sense.
Another piece of this is the downpayment. If you were already married, would you put down the full downpayment and consider the money "ours" or would you still think of that downpayment as your money, and expect to keep it if you two separate?
The Legal
This is where it gets hairy. Some states might consider your partner paying towards monthly housing expenses or helping around as proof of his partial ownership, even if only your name is on the house title and loan. If you buy the house unmarried, you'll also want to make sure you have Joint Tenancy with Right of Survivorship, so that if one of you dies, the other person keeps full ownership of the home.
My recommendations
- If you ultimately see living in this house with this man for 10+ years, I would buy the house together. It will reduce complications and awkwardness and allow you both to share in the joy of home ownership together.
- If you want to make a good investment, I would consider buying a modest house or duplex, living in it for now, and turning it into a rental or selling it for profit (if you're in that kind of a market) in 2-3 years. Be clear with him that this is 100% your property and that it's just an investment, and you'll happily buy a house with him when the time is right.
- If you decide to buy the house together now, you could either put down less money for a downpayment so that he can afford half, or he could borrow half of the downpayment (from you or someone else), or you could write up a legal contract specifying that you're putting in X for the downpayment and should you two split up or divorce, you expect to get that X repaid (with or without interest).
- When you get married, get a prenup. Here's my free Prenup course which walks you through the process.