Have you previously made the great leap to take your relationship to the next level by moving in with your S.O.? A few short years ago moving in together was the next big step before marriage. Remember when Monica and Chandler did it? Right, the time of Friends and moving in together as your step between dating and marriage is slowly shifting to a new normal. If you fall into the millennial age group like I do you may have noticed couples around you buying homes together before they’ve gotten married (or even engaged!) and the trend is continuing to grow. My (now) fiancé and I were those people last year, the unengaged home buyers, and I learned a lot through the process about myself, him, and managing our finances. If you are considering a similar path I wanted to share a few things I learned while buying a home with a man I wasn’t married to.
If you ever think you know everything there is to know about your significant other make a large purchase together. Buying a house with another person helps you quickly learn a lot about them. You learn how she/he handles stress, if she/he is an impulse buyer or someone who needs time to think, and many more personality traits that you may have never experienced before. Emotionally, you’ll learn a lot about one another. There are also several things you’ll learn about one another that can affect your home purchase financially.
Money in the Bank
You buy a house with someone two ways – emotionally and financially. If you are unmarried you may still be operating separately financially. Joint accounts may not exist and you may have never had a big money talk about how each of you spends and saves money. When you decide to purchase a home together you’ll need to discuss things like how much of a down payment you can afford together, who will pay for the up front costs of buying a home, and what you can afford to each contribute to closing costs.
I once read that before you marry someone you should check their credit score. That sounded completely crazy at the time, but if you plan to buy a house you’ll need to know where you and your partner measure on the credit scale. Your credit score determines how risky (or not) a bank thinks you are, how likely you are to be able to pay your loan, and in the end your interest rate will be a reflection of your credit scores. When you financially purchase a home together, meaning you both are going to be paying for the home and both of your names will go on the mortgage and deed, the bank will be taking both of your scores into consideration. If you both have great credit scores you’ll be off to a good start. If one or both of you have a less than great score you may want to seek advice from a financial advisor or loan officer to find ways to bring your score(s) up.
There are a few things that go into your mortgage payment that don’t exist in a rent payment including homeowner’s insurance, escrow, and taxes. These items get rolled into your mortgage and impact the amount you pay. You and your partner should discuss what you want your monthly mortgage payment to be with these items included. This can sway the price range of homes you are considering for purchase.