Should you buy a house together before marriage?
More and more unmarried couples are buying houses and cohabitating together nowadays. Before buying a home together, you should consider the implications, however. The following are some considerations you should make:
Less Tax Benefits
In the event only one person is on the mortgage, then only that person can claim deductions for the mortgage on their taxes, unlike with a married couple on a joint return. Ditto with any property tax deductions if that person is on the title alone.
If only one person is on the title, then only that person has bona fide evidence of ownership of the property, regardless of how much the other person may pay towards the house. In the event of a split, then unless that person is willing to sign over his/her interest, then the other person would have to hope the court (and possibly the mortgage holder) allows the other person to take title. However, the person on title is more likely to retain ownership of the house. Conversely, if you are both on the title, but only one of you are on the mortgage or have been paying more towards the house, then that person runs the risk of the other person receiving an unwanted share or ownership interest in the house.
If you both are on the mortgage together, remember that you each are independently obligated to the mortgage holder. Even if you split up, and one person retains possession of the house, then the other person is still on the mortgage, unless the mortgage holder agrees to release the non-occupying person from the note. The latter is unlikely, however. Thus, if the person who is responsible for paying the note defaults in their mortgage obligations, then the other person’s credit can suffer as a result. Sure, you could try to seek recourse from the courts, but if the person still can’t pay, your credit will still suffer. Since you’re no longer with that person, you will probably be very resentful as a result.
You should consider executing a written agreement delineating each person’s expectations, rights, and obligations before purchasing a property together – if you decide to purchase before marrying, that is. Your agreement can also spell out the remedies in the event of a disagreement or split between the two of you. Couples normally don’t expect to split, but splits do happen – even with married couples. Thus, the best way to avoid a possible headache, frustration, and disappointments would be to make an agreement in advance. That way, you both have already discussed the contingencies and how to handle them.