There was a time when a higher percentage of people were married before they committed to buying a home together, but it’s a lot more common to invest in a home together as friends, partners, roommates or just as an investment property for financial gain.
If you’re considering the commitment of a mortgage without being married, here are some things to be aware of before you start searching the market.
Relationship Status Won’t Affect Your Rates
It might seem like there are greater risks involved if individuals purchasing a property are not legally bound, but it actually makes no difference to the mortgage lender. If any number of people are buying a home together, the lender is going to be assessing their credibility based on their individual credit reports and financial history, not on their relationship to each other. All the proof, as far as lenders are concerned, is in the numbers.
What’s Your Credit History?
Most people are aware of their credit history, whether they’ve had financial hiccups in the past or are still paying off a significant amount of debt. However, it is more difficult for some to know the financial background of their partners. Because the lender will be looking at credit scores, if you or your partner(s) have had financial issues in the past, it can have an adverse impact on your application. While you may have a nearly perfect credit history, if your partner does not this can make mortgage approval more difficult. If this is the case, even in a marriage, it may be better for the prospective buyer to obtain the mortgage without considering the other party on the application. You may be eligible for better rates and terms when only you are on the application.
In The Event Of Conflict or Separation
Home ownership can involve significant hurdles after a divorce, but there will still be some legal and financial issues to wade through if you’ve never been married. Since it’s likely that you won’t want to continue to own property together, there’s the possibility that one party will have to buy the other out, which can be a sizeable financial burden. While this type of situation may never come to fruition, it’s important to be aware of what might occur so you can be prepared.
There can be a lot of complexities involved in investing in home ownership whether you’re married or not, but it’s important to have an awareness of your partner’s financial history, be prepared for financial hurdles and plan for an exit strategy if the partnership is no longer working. Give me a call for more information – J.P. Cook – 602-320-4253.
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