Buying a home together as a couple is an exciting (and sometimes terrifying) undertaking, the beginning of a new chapter in your lives together. Sometimes, though, it doesn’t take long for all that excitement and joy to evaporate, even (occasionally) transforming into stress, resentment, and bitterness. But with some preparation and difficult questions – have you had THE financial conversation yet?? – you can go a long way toward avoiding potentially negative outcomes. So carefully consider these 5 things couples need to consider before buying a home together in Boston.
1. Affordability and Financial Stability
First, you should consider whether you can actually afford to buy a home, and then take a hard look at your joint financial stability. Here’s what financial experts recommend with respect to buying a home together in Boston – A home purchase brings many financial responsibilities in addition to those that you already shoulder. Ideally, you and your partner should both have stable income allowing you to pay the current bills with relative ease. You should also seek to minimize any debt, which will in turn help to improve your credit score so you can get a better mortgage rate. If you’re not sure where to start, consider taking an online homebuyer class. And take it TOGETHER (with a bottle of wine and good attitudes!)
It’s also important to keep in mind that the cost of buying a home goes far beyond the down payment and monthly mortgage payments. Be sure to consider some the one-off and recurring costs, such as:
- Homeowners insurance
- Property taxes
- Closing costs
- Loan generation and processing fees
- Attorney fees
- Condo or HOA fees
- Maintenance and repairs
- Private mortgage insurance (PMI)
2. Type of Ownership
One of the most important things you will need to consider as a couple is the type of ownership – that is, the best way to hold the title. You have several options, and each has its own peculiar pros and cons.
Here, one of you owns the property outright.
If you and your partner want equal shares of the property, you may want joint tenancy created under a single instrument with the right of survivorship. This means that upon the death of one partner, the survivor receives the deceased’s share (half) of the property
TENANTS IN COMMON
With this setup, the co-owners own undivided interest or equal rights to enjoy the property during their lives. This differs from joint tenancy because tenants in common hold titles individually for their share of the property and can dispose of or will their individual ownership. But unlike joint tenancy, there is no right of survivorship and no other tenant is entitled to receive the decedent’s share of the property. Instead, the property goes to the decedent’s heirs.
HOLDING IN TRUST
A living trust of real property holds legal and equitable title to the real estate. The trustee holds the title for the trustor or beneficiary who retains all management rights and responsibilities.
Just keep in mind that the type ownership you choose can dramatically affect several aspects of the transaction and beyond, ranging from terms of the sale, to taxes and fees to be paid when you sell. Your best bet in determining your best option is to talk to a real estate attorney and a qualified local real estate agent. Good thing that at NextHome Titletown Real Estate, our Managing Broker Rory Gill is a licensed Real Estate Attorney as well, and has seen it all!
3. Splitting Costs
Typically, unmarried couples split the costs of the home purchase and ownership. Problems arise when the specifics of cost splitting haven’t been hammered out well in advance.
You should have these discussions in advance of writing that first check.
Some couples handle this by setting up a joint bank account to which each partner contributes a predetermined amount. Other couples choose to divide and earmark expenses, for example, one partner paying for the maintenance and the other paying for cable, utilities, and insurance.
There is no right way to divide up the property costs. You will have to have these conversations with your partner and determine what is fair and what you can reasonably afford. Keep in mind you’ll also need to include additional homeowner expenses such a property taxes, homeowner’s insurance, and condo fees.
4. Wants and Needs
You want the Southie condo with the sweet roof deck, but your partner wants a yard in Savin Hill.
You and your partner may have different goals here, so you should address this before you even begin house hunting. To avoid friction and determine your individual and collective needs and wants, be open and transparent in your planning conversations.
You and your partner will likely value different features and amenities, and have different goals. You have to keep in mind then that buying a home together in Boston means at least some compromise – sometimes a good deal of compromise.
5. Exit Strategy
And, of course, sometimes the best of things don’t last. So you need to have an exit strategy prepared beforehand in case you and your partner part ways. Again, an unwelcome and awkward conversation, but if find yourself splitting up, you will be happy that you had this discussion in advance.
Here are the most common exit strategies for couples buying a home together in Boston:
- One partner can buy the other one out. This means giving them their part of the deposit back plus any growth in the property value since you bought.
- Sell the home and repay the loan. Depending on the property market at the time, selling may be a viable option to pay out the loan.
- If you’re on good terms, renting out the home until the property market improves could be a good option. This helps with the loan repayments and gives you time to re-evaluate everything.
Of course, whatever you decide to do in this event will be largely determined by the type of ownership you choose.
Lean on NextHome Titletown Real Estate
It should be apparent, then, that couples buying a home together in Boston have a lot to decide. That’s why it’s so critical to call on your agent’s knowledge and expertise to help you navigate this perilous ground. At NextHome Titletown Real Estate, our experienced agents are ready to help you make the right call. Contact us today at (617) 657-9811.
Just Hit the Market in Boston!
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