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(Steve Griffin | Tribune file photo) A home for sale near 1700 East and 1100 South in Salt Lake City, Wednesday, Nov. 13, 2013. Home sales along the Wasatch Front are continuing to slow slightly as the effects of sizeable price gains and rising interest rates combined to dampen last year’s summer sizzle in residential real estate.
Key considerations for unwed couples buying a home
Strategies » Though still a small slice of the homebuying pie, more are saying “I do” to a mortgage before marriage.
First Published Jan 17 2014 08:56 am • Last Updated Jan 17 2014 04:39 pm

Married couples represent the majority of homebuyers, but more couples are teaming up to buy a home before they get hitched. If they ever do.

Data from the National Association of Realtors show that, on average, married couples accounted for 61.6 percent all homebuyers from 2001 to 2011. By comparison, unmarried couples made up an average 7.5 percent.

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Although still a small slice of homebuyers, some unwed couples see positives to buying a home together before getting married.

Teresa Hung, a customs broker in Baltimore, decided to put off getting married in 2012. Instead she chose to buy a home with her boyfriend, James Woody, a retail executive. The couple wanted to take advantage of still-affordable home prices — rather than splurge on a wedding and continue paying rent for months or years.

"I did want the wedding and all that," said Hung, 29. "It definitely wasn’t an easy decision."

Here are some tips unwed couples should follow when they commit to buying a home:

1. Swap financial history » Before considering buying a home with your significant other, share all of your key financial statements. That includes bank accounts, credit cards, student loans, retirement accounts and so on. Also share credit reports and FICO scores.

You’ll need to know of any credit blemishes that could prevent you from obtaining the lowest rate on a home loan, or other potential red flags, such as a high debt-to-income ratio.

2. Agree on what you can afford » Before you hit the first open house, determine how much each person can contribute, especially if you opt to apply for a home loan together. Bankrate Inc. offers online calculators to help estimate how much you can afford based on your income and expenses, e.g., http://apne.ws/12bNGkc .

One rule of thumb: a house payment shouldn’t be more than 28 percent to 30 percent of a buyer’s monthly income.


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With an unwed couple, particularly if one person earns a lot more than the other, other approaches may be a better fit.

John Porter and his partner, Horacio Alonso, are in the market to buy a home in Miami together. The couple has already made it a point to benchmark how much home they can afford based on a percentage of their individual income.

"Our incomes are not equal," said Porter, co-founder of an organic cocktail mixers company.

He said splitting the costs of the home evenly would not be fair. As a result, the couple decided to base each person’s contribution on 30 percent of their individual earnings, Porter said.

3. Sign a contract » Even if a falling out seems unimaginable, couples should enlist an attorney and draw up a purchase contract before buying a home.

Such a pact should outline details of how much each person is contributing, whether it’s money, taking on a loan or paying to cover maintenance and other costs.

"It has to be very clear who is putting the money in, who is going to do the improvements, so they have a good understanding of ownership," said Monica Rebella, a certified public accountant in Tustin, Calif.

The pact also can set how the couple wants to split any equity gained in the home, for example.

The contract details can help sort out how much of a financial interest each person has in the home in the event of a split, which could lead the home to be sold or one person offering to buy out the other.

4. Understand ownership options » Homebuyers have a couple of options on how to assign ownership on the title to the home. Specifics can vary by state, but generally the title can list one person as the sole owner, or more than one person.

Unwed homebuyers generally hold title as "joint tenants" or as "tenants in common."

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