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SINGLES . . . BUYING TOGETHER

Updated:         June 5, 2018

One of the nation's fastest growing segment of buyers are singles. By pooling their income (for qualifying purposes) and their down payment cash with a friend, relative or significant other, singles are packing up their apartments and moving into permanent addresses.

As the first generation to share property deeds but not marriage licenses, single couples need to tread carefully through the purchase process. The key to two unmarried people buying a house together is to resolve potential problems in advance. In other words, plan for the worst case scenario even when the relationship seems everlasting.

Many single couples resist creating what is much like a pre-nuptial agreement. For those who are "committed" to each other, there appears to be something inherently wrong with determining what will happen if you separate. Never-the-less, it makes sense to consider how the property and/or any existing equity will be divided should the couple break up in the future.

It is unlikely that both borrowers will invest equal amounts of money to consummate the purchase. When there are disproportionate amounts of money invested, it may make sense to determine in advance who will own the house should a break-up occur.

Some of the questions to be answered include:
- how shall title be held?
- will the home be sold or can one person "buy out" the other?
- Should a sale occur, how will any equity be distributed . . . Equally, or in proportion to their initial investment or?
- If the home is to be sold, who will remain as occupant during the sale?
- If one party moves out, how will the mortgage be paid . . . Will both parties continue to contribute to the payment or will the occupant be responsible for the entire mortgage payment?

Even under the best of circumstances, the borrowers will have to make on-going decisions regarding expenses. There will be repairs to be made and improvements to consider. Will these kinds of homeowner expenses be shared? Will each partner contribute to a "home fund" from which all expenses will be paid?

Obviously, there are many aspects of home ownership that must be considered before proceeding to invest as unmarried co-borrowers. Thinking through the process in advance will help avoid future disappointment and/or dissatisfaction.

Changes do occur even in the most committed relationships. Jobs change, people become ill and sometimes people fall out of love. Arguments and bickering do occur when couples break up. Buying a home together is a major investment. Make decisions well in advance for a future that could include your worst fears.

Finally, put your agreements in writing!

 

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