According to the Marriage and Homebuying Study by Coldwell Banker Real Estate, nearly a quarter of millennial couples aren’t just shacking up before getting married — they’re buying their first homes together. Now don’t get us wrong: nesting is a beautiful thing. But this is a big/huge/GIGANTIC investment, and you don’t want to get burned by it down the road. Read on to cover all your bases…
1. What factors should you consider before buying a home together before marriage?
While you’re building a home together, you’re not technically bound together legally until you’re married. Protect yourself against any losses or discomfort in the future by making sure that both of your names are on the housing deed. In the event that the unthinkable happens (i.e., you breakup) you will both have an equal stake in the sale of the house and its contents.
It’s best to choose a home with a mortgage that is payable on one income. Don’t splurge for the big fancy one that requires both of you to be working; should something unexpected come up, like an injury, sickness, or having a baby, you want to make sure you can keep making those monthly payments comfortably.
Finally, make sure you are both comfortable with your mortgage. Notice we use the word “comfortable,” not “getting by.” It’s important that the person you’re splitting a mortgage payment with isn’t just scraping by, but in a good position to make their monthly payments. This means their housing costs should be no more than 25% of their monthly income (and the same goes for you!). If they’re budgeting so closely that, should something come up, they’ll be unable to pay their way, you should try for a less expensive place, period. Because guess what: if your significant other is unable to pay their portion, it’s you that will pay in the form of late fees or even eviction.
2. Should you and your sig-o combine finances, or keep them separate until marriage?
This is a totally personal choice, but we recommend keeping one spending line and one savings line for just you. Again, you’re in love and we hope you stay that way, but in lieu of a formal divorce should you breakup you want to have assets in your name, at your disposal. And you don’t want your credit score—aka your financial report card—tied to someone else’s finances, just in case. Tackle housing costs, groceries, auto maintenance, etc. together, but your personal savings as well as the “fun stuff”—clothes, salon visits, travel—is on you.
3. What should you know (financially) about each other, and how do you start that conversation?
When to bring it up: Early on! Better to get any uncomfortable or even embarrassing news out on the table before things get serious enough for it to become a dealbreaker. This is where you could make known any unusual health conditions, family irregularities, or even past relationships that may come up in the future. And, of course, any pesky credit card debt, student loans, or financial goals that are important to you.
How to bring it up: This is a delicate topic for men and women. So set yourselves up in a mutually comfortable, non-chaotic and un-rushed environment. The important thing to convey and establish here is sincerity. Men: give your girlfriend a realistic idea of your financial status so that it is never assumed you are in a position which you are not. You don’t want to start the relationship by setting unreal expectations from her — and hey, if she doesn’t love you for you no matter how heavy your wallet is, it may not work out anyway. Women: It is more appropriate for you to reveal your financial status by showing him than telling him. This way, you can make your situation obvious without bruising his ego or threatening any dynamic perceptions he might have.
4. How might the decision to buy a house change our relationship, and how can we work through it?
It sounds cliché, but communication is key, especially when it comes to money. Don’t ever assume that your significant other understands your financial picture and mores simply by osmosis. Set goals—together. Discuss what your goals and purposes are for the relationship. Whether it’s just for fun or for life, being on the same page with your goals and purposes aligned is key to the success and longevity of the relationship. Does he want to travel for a while? Do you want to start a family? Set these big milestones together and adjust them as your commitment and work/life situations change. It will give you something to work toward, together, and ensure that you don’t run into nasty arguments simply because “I didn’t know that’s what you wanted.”