Navigating the Waters of Unmarried Homeownership

Navigating the waters of homeownership can be both exhilarating and daunting, especially when embarking on this journey as an unmarried couple. There is something decidedly appealing about sharing the costs, chores, and varied responsibilities that come with owning a home, particularly if you're in a committed relationship. Interestingly, a 2013 survey revealed that a quarter of couples aged between 18 and 34 embarked on homeownership before tying the knot. Despite these compelling figures endorsing joint homeownership, we urge you to consider the following crucial aspects before diving into this commitment.

Choosing the Mortgage Applicant with CrossCountry Mortgage

An excellent credit score is a significant asset when it comes to securing a home loan. Should one or both of you have a less-than-stellar credit history, this could potentially impact your approval prospects. Lenders, including CrossCountry Mortgage, initially assess your individual credit scores from each reporting agency and then adopt the median score. The lowest score among both applicants will then be utilized to determine approval and mortgage interest rate. For instance, if one party has a superior credit score, the other might opt to be listed only on the title, not the loan. While this approach may entail added risk, with the burden of the home debt falling solely on one individual, it can also increase the chances of loan approval.

Deciphering Property Titles

Understanding property titling is vital for unmarried homebuyers. Here are the three main options:

Sole Ownership: Only one person's name appears on the deed. This individual assumes all the rights and responsibilities of homeownership.

Joint Tenancy: Each person owns 50% of the property. Should one tenant pass away, their portion would automatically transfer to the surviving tenant. This right of survivorship helps protect the property from potential claims by estates or relatives.

Tenants in Common: This option allows for disparate ownership, allowing one party to own a larger share of the property, such as a 75-25% split.

Formulating a Contingency Plan

While it might be awkward, it is vital to plan for unforeseen circumstances like a breakup or a death. In the case of the latter, the right titling option could have profound implications. However, the dissolution of the relationship can introduce ambiguity over ownership. Experts at Forbes advise unmarried couples to consider a cohabitation agreement or a pre-homebuying pact. This foresight can help resolve potential disputes such as:

• How will financial contributions be divided?
• Who will be responsible for the mortgage payments?
• What happens if you decide to sell the home?
• How will property be divided if the relationship ends?

Preemptive agreement on these issues could help prevent litigation or mediation during a potentially stressful breakup.

Whatever your plans, our team at CrossCountry Mortgage is ready to guide you through your homeownership journey. Contact one of our Mortgage Advisors today for more information.