Buying
Buy Alone or Buy Together?
Did you know that marriage is becoming less popular? With this has come an increase in cohabitation between partners, and even friends going in on homes together. You may be wondering whether or not it is wise to buy a house with your significant other (or even best friend!). Here are the pros and cons of buying together.
Pros of Buying Together
1.Splitting Expenses
This is the most obvious advantage to buying a home together. It’s much easier to become a homeowner when you have two incomes going in on the down payment, and the mortgage is much more manageable with two incomes as well. You also get to split all the additional expenses that come with a home. Utilities, electric, internet payments…you name it, you get to split it.
2. Easier to qualify for a mortgage
It’s harder to qualify for a mortgage when you only have one income recorded. You’ll have an easier time working with lenders with two working individuals.
3. You both build equity
This is especially important to note if you are going in on a home with a friend or cousin. In these scenarios, you know that eventually you will part ways. Even so, buying a home together may be beneficial (rather than renting together) so that when it is time to go your separate ways, you have both built equity.
4. Enjoy tax breaks
If you wait to buy a home together until you get married, you won’t enjoy the tax breaks that come with homeownership. Buy now – and you both get to have these tax benefits.
5. Make the transition to marriage easier
When you buy a home together before getting married, you don’t have to worry about as many details after getting married. There are so many other details to take care of with the wedding, honeymoon, name changes…if you deal with housing beforehand, you might be less stressed out when the wedding rolls around.
Cons of Buying Together
1.Can add stress to relationships
Living together is a big step for any relationship – romantic or otherwise. Add to this co-ownership and the stress of being involved in such a large financial decision together…that much pressure can be difficult for a relationship. If you’re not confident in the foundation of your friendship or partnership, it might be best not to rock the boat by going in on such a weighty financial decision together.
2. Makes it more difficult to walk away
Buying a home together requires a deep level of commitment relationally and a lot of work logistically. If things go south in your relationship, being on the title of a home and on the mortgage papers together make it a lot more difficult to peacefully (and simply) end things. Additionally, if you have ever been concerned about your partner being emotionally (or otherwise) manipulative/abusive in any way, co-owning a home can stick you in an unhealthy relationship for far too long.
3. You’re dependent on them financially
If your friend or partner’s financial situation suddenly changes – you are liable for all their missed payments. You need to think very hard before linking your livelihood to the income of another person – especially if you don’t have a confident reason to believe that they can maintain a steady income.
4. Lowest credit score determines mortgage
This is a major determining factor that most people realize. Lenders aren’t going to assume the best-case scenario, so they determine mortgage rates based on the lowest credit score out of the two of you. Depending on who you’re going in on a house with, you might have better luck owning by yourself and collecting rent from a friend to keep the mortgage low.
While buying a home together does provide certain financial positives and conveniences, there are a lot of relational stressors that should be considered before making this weighty decision together with anyone – whether they be a partner or a long-time friend. At the end of the day, you have to objectively base this decision on the quality of your relational strength and the reliability of your friend/partner’s financial situation.
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FAQs
1.Splitting Expenses
This is the most obvious advantage to buying a home together. It's much easier to become a homeowner when you have two incomes going in on the down payment, and the mortgage is much more manageable with two incomes as well. You also get to split all the additional expenses that come with a home.
Is it better to buy a house jointly or separately? ›
Using the combined income and assets of you and your spouse means you have greater buying power and may be able to purchase a more expensive home if you both have good financial histories.
Does it make sense for a single person to buy a house? ›
Advantages of buying a house as a single person:
As a single person, you have more freedom to make decisions for your home, as you only need to consider your own needs. Having a spouse or children can limit your options, as you must consider their preferences and requirements, which may narrow down the potential homes.
Can a boyfriend and girlfriend buy a house together? ›
The Bottom Line: Unmarried Couples Can Buy A House Together
It's important to have full transparency with your partner. Make sure to discuss important topics such as your finances and your wishes for the property if you break up or a partner dies.
Should I buy a house with someone I'm not married to? ›
It should be something you both equally want to do. One person shouldn't be pressuring the other. Make sure your reasoning for buying a home together is solid. This is a big decision with huge consequences for both of you, and if it doesn't feel right, it might not be a good idea.
What are the benefits of buying a house with someone? ›
Pros
- Multiple incomes mean being able to afford more and make a bigger down payment.
- You can split any ongoing homeownership costs with your co-buyer.
- Co-buying gives you a chance to begin building equity at a younger age.
When your loan is split and fixed on different terms, it means you never have the whole amount coming up to be refixed at one time. If interest rates are rising, you only have to deal with a higher repayment on a smaller portion of your overall borrowing at any one time, giving you time to adjust.
What is the 36 percent rule? ›
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance.
What happens if your wife is not on a mortgage? ›
If your spouse is not on the mortgage, they are not responsible for paying it. However, the mortgage lender can foreclose on the house if the mortgage is not paid.
How big of a house should a single person buy? ›
How To Calculate What Size House You Need
| Number of People | Square Footage |
|---|
| 1 | 600 sq. ft. |
| 2 | 1,200 sq. ft. |
| 3 | 1,800 sq. ft. |
| 4 | 2,400 sq. ft. |
Oct 27, 2022
In a recent study analyzing the "sliding homeownership ladder," data showed the majority of residents in California don't own a home until age 49. SUGGESTED: These are the top US states people moved to and from in 2023: See how California ranked.
Is it difficult for a single woman to buy a house? ›
If you are a single woman buying a home, you will need to tackle the steps to homeownership on your own. With a single income, it can be a bit more challenging to save for a down payment and build credit. But it's absolutely possible.
How do I protect myself when buying a house with a partner? ›
You might want to sign a “tenancy in common agreement,” which is similar to a cohabitation agreement. Such a document sets out who owns what percentage, clarifies the couple's financial obligations, and spells out each person's buying and selling restrictions and duties in the event of a split-up.
What to do if you break up with someone you bought a house with? ›
You can either follow the legal procedures that apply in your state—typically this means the court will order the property to be sold, and the net proceeds (after paying mortgages, liens, and costs of sale) to be divided—or you can reach your own compromise settlement.
How do I protect myself when buying a house with my girlfriend? ›
In most cases, a joint tenancy or tenants in common agreement will protect your interests. But it is a good idea to speak to a real estate attorney to ensure that everything is above board.
Should couples buy a house together before marriage? ›
If you are not ready to share your finances, waiting until you are married may be better. But if you both are on the same page, avoiding financial entanglement shouldn't be too difficult. Getting a house before marriage might be a big mistake if you do not see yourself with your current partner long term.
How long should you be in a relationship before you buy a house? ›
As LendingHome co-founder and CEO Matt Humphrey puts it, “buying a home is stressful for just about anyone, but even more so for couples and first-time homebuyers.” It seems as though partners who have made it through at least five years together have a more solid foundation on which to build.
How to protect yourself when buying a house with a partner? ›
You might want to sign a “tenancy in common agreement,” which is similar to a cohabitation agreement. Such a document sets out who owns what percentage, clarifies the couple's financial obligations, and spells out each person's buying and selling restrictions and duties in the event of a split-up.
What happens if you buy a house with someone and break up? ›
You can either follow the legal procedures that apply in your state—typically this means the court will order the property to be sold, and the net proceeds (after paying mortgages, liens, and costs of sale) to be divided—or you can reach your own compromise settlement.
Buying
