So, this post might be awkward for some to read. And it certainly will get exponentially more awkward if you already bought a house with a spouse and DIDN'T do any of these. But some of the most productive talks are those awkward ones because they need to happen! More and more people are foregoing that whole marriage thing and buying a house before any nuptials. And that's great. But there are some things everyone should do that might seem like common sense, but simply don't get done. Everyone needs to acknowledge worst case scenarios, putting heads in the sand is a recipe for disaster. Let's get into it:
1) This one in my opinion is the hugest on this list - discuss credit history with each other. Married couples face the same thing, but statistics show that typically they delve much deeper into complex financial discussions before any big purchases like a home. Talk credit score, specifically. Even if your credit is mint, if your partner's sucks, a loan might be a serious issue. Have the talk!
2) Don't just plan who pays what over a bottle of wine and appies. You’ll want to draw up a legally binding contract (with help from a real estate lawyer) that spells out the following parameters:
What each person contributes to the down payment
How much equity each person has
What each party will pay, including the mortgage, taxes, utilities, and maintenance
Don't assume you have to go 50-50. Many couples do 70-30 or even 80-20, just figure out what works for you specifically. Most importantly, the agreement should include a provision as to what happens in the event that you two break up. I know you will be the one couple in the world that has zero chance of splitting up, but just do us a favor and get this done.
3) Explore title options. I won't get into them all here, but there are quite a bit of legal options in regards to all the ways a couple can "own" a property. Again, this is something that needs to be discussed with your lawyer.
4) Making house payments separately is a significant mistake. We get that a lot couples want to keep finances separate when they first move into their place, but if you're paying a mortgage and other home expenses together, having a joint account—into which you both contribute money from your separate accounts—can help streamline your house payments immensely.
So all you sweethearts out there have some homework to do before you take that house plunge. Be smart!