Planning your wedding can be stressful. Adding a home purchase to it increases the chances of amplifying the stress level you will most likely get into.
So, if you’ve already decided to handle the responsibility of carrying a bride or being carried by a groom, along with the procedures involved when buying a home, you are not alone.
Statistics show that one out of four couples between 18 and 34 have searched and purchased a home before walking down the aisle and tying the knot.
Before hopping in the car with your fiancée and shopping for the best options to fulfill your plan of buying a home, ensure that you are equipped with the proper know-how. For best results, consider reading the following tips.
1. Take your individual financial situation into account
A mortgage application is a typical component of buying a home. As such, you need to decide if both of you or either one will apply for this. Typically, the decision is based on your financial situation as two separate individuals, not as a couple. For a start, you should make a different list of the following.
- Credit score
- Annual income
- Total debt
If you and your fiancée’s credit scores are significantly different, it is best to let the high-scoring partner handle the mortgage application. A higher credit score allows you to secure a loan with a lower interest rate and monthly payments.
However, if the high-scoring partner has a lower income, you will need to decide which to prioritize, a higher loan amount or a lower interest rate.
2. Decide on the most applicable way of holding the title
Another essential concern that must be handled well when buying a home before the wedding is the decision as to how you want to hold the title. Typically this is usually done in two ways. However, both of these have their own pros and cons. Reading the information provided below would help you understand how these work.
Joint Tenants
This arrangement grants those who are buying a home or the tenants equal shares of the house. If one of the tenants dies, the surviving tenant will automatically have control over the share of the deceased tenant, regardless of any related stipulation included in the deceased’s will.
Joint tenancy, known as the “right of survivorship, ” helps avoid probate. The agreement ends if one of the partners wants to sell his/her share of the property. Also, the new owner automatically becomes a tenant in common, and the survivorship will have no rights.
Like the other arrangements when buying a home, the joint tenancy has a number of tax consequences on the part of the survivor. Due to this, it is best for you to work with a property lawyer and your financial advisor before you decide on this method of holding title.
Tenants in Common
This is the most common way of holding a title that unmarried partners resort to when buying a home. This method eliminates the surviving partner from inheriting the other’s share upon death. Instead, the ownership of the share is transferred to the person that the deceased named in the will.
Unlike the joint tenancy arrangement, the tenants in common allow the ownership of an unequal share of the property. This means you can own 60 percent of the property, and your partner can own the remaining 40 percent.
But just like the other arrangement, tenants in common come with various legal ramifications. As such, you are strongly advised to consult your property lawyer before buying a house and resorting to this method of holding the title.
3. Anticipate Other Possible Problems
Although walking down the aisle and eventually tying the knots somehow assure that you and your fiancée will soon become a legally-married couple, a breakup can still occur during this phase. Due to this, it is best for both of you to anticipate other possible problems that might come along the way.
But because you are buying a home before the wedding, consulting with a licensed property lawyer is strongly recommended. This is because the lawyer is the most appropriate professional that can help explain the potential legal pitfalls of a breakup before the wedding and the effect of such on the properties purchased.
A lawyer can also help you develop a written agreement that outlines the procedures that will govern the ownership of the purchased property in case you fail to complete the exchange of vows.
