Love is blind... and decisions made in love may not be the best for your future. Especially... when it comes to buying a house.
Buying a house is not like buying a new pair of jeans. It's more permanent and comes with more responsibility. It requires attention, maintenance, repairs and will cost you even more money after you've purchased it. Between the furnishings, decorations, appliances, paint etc. a home is not a small investment. Not to mention the bills, taxes and mortgage payments! Large investments require thought and planning.
It can be easy to justify buying a house together, especially when you are in love. First, you never know someone until you've lived with them... Right? Naturally you'd like to figure some of these things out before tying the knot. And secondly, buying a house together with two incomes makes the bills, taxes and mortgage payments more manageable. Lastly, it may allow for a larger purchasing budget for a nicer house with more square footage.
Before you go jumping into purchasing a house together, remember...
No one can predict the future.
Married couples are legally united together and have legal rights in the marriage. In the event that a married couple splits, legal measures can be taken so that both parties walk away with their fair share in the joint assets. This is not the case for couples who are just dating.
Consider this: If you were to break up or split up, who gets the house? Not all break-ups are amicable. If you both bought the house, how do you decide who moves out and who stays? Or can either one of you afford to live there alone?
This is why buying a house together while dating may not be the best idea. No one can predict what the future holds and without the legal unification of marriage, couples face obstacles of the unknown. It also places a lot of pressure on a couple to make the relationship work.
People also jump into buying a house to make it more affordable - which seems like a great idea. However, in the event of a break-up, one person is now solely responsible for all of the bills, taxes and mortgage payments. This may not be feasible if the house was purchased based on two salaries versus one.
What do you do instead?
Times have changed. Couples no longer wait until marriage to live together. Many couples feel that the next natural step in their relationship is moving in together before deciding to get married. Regardless of how you feel about that there are alternative options to accomplish living with each other while also looking out for you and your best financial interest.
Option # 1: Rent an Apartment Together
Ending a rental or lease agreement is a lot easier than selling a house. This option makes more sense when you are figuring out if this relationship will lead to marriage. Here, you can navigate through living with each other before making the commitment to buying a house.
Have a discussion with your significant other. If after some time you both agree that marriage is something you both want, getting engaged and/or married before buying a house together makes more sense. You'll feel confident that you have taken the appropriate steps before jumping into something you're not ready for.
Option # 2: One Person Buys A House, The Other Pays Rent
Not a fan of renting? I don't blame you. Here's an alternative:
Between you and your significant other, decide which one of you would like to and is able to buy a house. Buy it with the intention that only the buyer will be responsible for the bills, maintenance, taxes etc. on their income alone. This may force you to purchase a house that costs less, may be smaller and may not be as extravagant as you envisioned. Why is this important? Making sure it is affordable to you and only you prevents the potential failure to make ends meet if you two do split up. This way, it is clear who is moving out and who has the house.
A bonus tip: Charge rent to your significant other. If they are living there with you full time, they are using electricity, water and heat just as much as you. Charging an agreeable amount of rent will not only help you out with the mortgage, taxes and bills, but it will also make your significant other feel as though they have some skin in the game. They can have input on things within the house just as a person renting a place would.
It may feel awkward doing something so formal as a rental agreement with your boyfriend or girlfriend. Doing this will be better for you, your relationship... and your wallet!
Before you think of jumping into buying a house with your significant other, consider the two alternative options above first.
As with any major decision in life, open communication is important. Be realistic and cautious and remember that love is blind. Choosing to entertain one of these alternative options will provide clarity and peace of mind for you and your significant other. You can venture into the next stages of your relationship with a clear and confident mindset.
Contrary to popular belief, financial planning does not strictly contain retirement planning solely. In many cases it is lifestyle planning. Every stage in life presents opportunities that will affect your overall financial security. If you need advice when it comes to things like buying a house, your financial advisor is a great contact to reach out to.
We've been helping individuals and families with lifestyle planning over the past 35 years. If you're in the WNY area and are looking to have a trusted team through all of life's challenges, give us a call at 716-662-4470. We've helped our clients gain the clarity they need to solve problems that stand in the way of simplicity. We'd be happy to do the same for you!
Chelsea Maderer is a Financial, Investment and Tax Advisor in the Buffalo-WNY region. She helps individuals and families to Clarify their needs and goals, Solve their problems, and Simplify their life to avoid the common mistakes that get in the way of enjoying life and retirement.
For more information please visit: http://SFTAweb.com.
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