Many couples today are buying houses before they tie the knot. In fact, one in four couples between 18 and 34 purchased a house together before they were married. One poll of 500 millennials found that 40% think it’s a good idea to purchase a home before marriage, and 37% believe a home purchase should take place before they walk down the aisle.
But buying a home when you’re unmarried comes with complications.
1. The Cost of the Home
The first thing to consider is the cost of the home. More importantly, you should consider how much house you can actually afford. If you’re unsure of how much you can afford, you can use an online calculator to get a general idea. The calculator will ask questions about your income, down payment and monthly expenses to determine how much you might be able to spend on a home.
Owning a home will pay off financially if you live in it for at least five years.
2. The Cost of Maintaining the Home
Most couples dream of owning a home together, but they often overlook the cost of maintaining that home. Unless you’re buying a newly-built home, you can expect to run into a few problems in the first 5-10 years of owning the property.
The older the home, the greater the chance that something will need to be repaired or replaced.
One of the more common problems homeowners run into is a faulty furnace.
“When your furnace gets older, it often becomes inefficient, especially if it has not been properly maintained throughout its lifetime,” says Affordable Plumbing and Heat. “This could be causing higher utility bills than necessary, and could also result in emergency service calls, should your system fail during cold winter weather.”
The average cost of a furnace repair is $300, but it can cost $400 or more. If the system needs to be replaced, it can cost thousands of dollars.
The furnace is just one of many potential repairs you may have to make shortly after purchasing your home. Ensuring that you have an emergency fund in place can help soften the blow if an emergency repair should arise.
3. The Down Payment and Your Credit
Two other important considerations: your credit scores and the down payment for the home.
How much of a down payment will you have? How will the down payment be split? Will one of you cover the entire down payment, will you split it, or will it be divided some other way? It’s important to come to an agreement over how the down payment will be taken care of ahead of time.
The down payment should be between 3.5% and 20%.
Along with coming to an agreement on the down payment, you should both check your credit scores. As you know, getting a mortgage requires a good credit score. If one of you has a good score and the other doesn’t, this can be problematic if you plan to purchase the home together.
Check your credit report for errors and take steps now to improve your score.