Should we buy a home before or after we’re married?
Whether you’re in a committed relationship, just got engaged or just got married there’s a lot to consider when you’re thinking about buying a home with your partner. It’s important to remember that each couple is different. There is no one right way to handle your home purchase. These are just some things I think are important to consider, but not an all-inclusive list.
One of the benefits of having a partner is having two incomes. Especially when you’re considering taking on new debt, and one as large as a mortgage. As long as neither of you have excess debt your combined income will allow you to have more buying power. With two incomes you will typically have a lower DTI (debt to income ratio). This can also help you obtain a lower interest rate.
An important conversation to have with your significant other is about both of your credit history. Ask your partner if they’ve had any negative credit. Foreclosures, bankruptcy, collections, late payments, etc. It’s a tough conversation to have, but you want to go into this with both of your eyes wide open. Look at your free credit report together and if there are things you need to work on, make it a goal together. Credit worthiness is an important qualifying factor when it comes to your mortgage. If one of you doesn’t have good credit, you might just want to have the other person on the loan.
In this case where only one of the partners is on the loan, if they need, they can have their Fiancée gift funds for closing, down payment, etc. If you have joint bank account that probably won’t matter. Each situation will be different.
Another interesting consideration is if you’re an unmarried couple using a VA loan you are not able to utilize the 0% down payment option. They will require a down payment, they calculate the amount, but it’s typically around 20%. They don’t allow down payment assistance programs to cover it either. Although, it can be gifted from a family member. So, in the case of a VA loan it pays to wait until you’re married.
Washington is a community property state, meaning if you’re married and you acquire real estate it belongs to both spouses. Although, if you acquire real estate prior to marriage it is considered your separate property.
You’ll want to consult with your title company and possibly your lawyer to decide how you would like to take title or your “vesting” there are many different vesting possibilities, such as an unmarried couple or as his separate estate, etc.
It’s a god idea to have a consultation with a lawyer about how you will acquire and hold title and that your real estate interests are protected. If you need a great referral, please reach out to me. I know a great local lawyer who offers $150 consultations. This is likely one of your largest assets, so it’s worth protecting.
Let’s say you don’t have plans to get married, but you’re in a committed intimate relationship (CIR) either of the parties in the relationship could have claim or interest in the property even if they’re not on title and/or not liable for the loan payments. That’s a scary thought.
You might want to wait to buy a home until you’ve changed your last name(s). If you don’t wait and you already own your home and now you need to change your name it could be as simple as e-mailing copies of the documents to your lender and they change it on your account. Or, they could require a modification to the deed of trust to be reordered and charge a fee. It’s a good question to ask up-front if you know you’ll need to change your name down the road. If you don’t change your name with the lender, but it’s changed with the bank account the payment comes from you could run the risk of the payment being rejected due to a difference in name.
It’s important when you change your name to go through the process in the right order. It’s a time-consuming process There are several free checklists, I’ve found a good one. If you’d like it, please reach out to me.
I want to reiterate that you have to do what’s right for both of you. There’s no one right way, these are just some things to consider.
Maybe in your case your lease expires before you get married. You don’t want to renew for another year and you don’t want to run the risk of having the rent increased. In this case you might decide to buy before your big day.
Keep in mind that the home buying process does take time. To get approved, shop for homes, find the right one and move toward closing it could take any where from as quick as 15 to as long as 60 plus days.
If you’re in the market to buy, I hope I can assist you. Please, reach out to me when you’re ready.