Here's a reminder from Bankrate not to commit to any debt with someone you're engaged to -- wait until you're married. The reason: engagements have ways of being cancelled (not that marriages don't, but the former is much easier to call off.) Bankrate's thoughts:
Do not, under any circumstances, take out a loan to buy your fiance a vehicle. Until you're married and have some legal ties that bind you together, he could back out of the marriage, disappear with the truck and leave you holding a large loan.
My niece is going through this same sort of trouble now -- but magnified greatly. She and her fiance bought a HOUSE together, and they planned to live in it after they got married. Guess what happened. Yep. They moved in together, then things went south. They broke off the engagement and now are living together but not as a couple and trying to figure out how to sell a house while not talking to each other. It's not a pretty sight.
It's a good warning when only thinking about the financial standpoint but it's not always practical when it comes to comfort and relationships. I'll be closing on a house in like a month with a woman that I won't be marrying until September. I'd rather have both of our names on it now than to take additional steps later to put the second person on the lease. We've been with each other long enough to have a large measure of confidence that we can be with each other for the rest of our lives and at least another 4 months. It is always something that should be considered though. Each person would just have to decide if they want to risk tying themselves to someone else financially before marriage or if they should wait until later in the marriage.
Posted by: Rzrshrp | May 13, 2008 at 10:03 AM
I was about to post that this is a fantastic idea, and it's just dumb to go into debt with someone before you're married, but then I realized I did it on my house.
My now-wife and I closed on our house about a month before the wedding. As usual, there were a million factors at play, and it was the best decision for us - her apt. lease ended and she moved into the house and I stayed at my rented townhouse until we married, then we moved in together.
It was nice to do it that way FOR US, but I knew US, and I would never specifically recommend for someone else to do that.
And yes, it could have backfired...
Posted by: Trent D. | May 13, 2008 at 10:50 AM
Obviously from the 2 examples and my situation - also bought our home about 2 months before we were married - it depends on the couple. Unfortunately, the people that really need this advice probably aren't reading this blog.
Posted by: Kevin | May 13, 2008 at 11:00 AM
I'd recommend not closing on a house together even after you are married, if possible. If someone sues your spouse, and you own the house, they can't touch your house. Keep all creditors separate if possible, so if you screw up credit-wise, it only hurts one credit record, and you could still use the person with the good credit to get low rates.
Personally, I almost co-signed a loan with someone I almost married, but didn't. I'm glad I didn't sign on the dotted line, because she didn't have her finances together, and I'd end up being responsible for her house.
Posted by: Ryan S. | May 13, 2008 at 11:32 AM
Ryan, I understand the potential benefits of keeping some assets separate. I had considered using "his", "hers" and "house" accounts when we got married. However, I changed my mind because I think that part of being married is being one flesh, but also one in finances.
My marriage is more important than my finances, and so owning the house on my own, or having separate bank accounts, or having a credit card in just her name to me is tantamount to lack of trust, and lack of unity.
Maybe I'm just old fashioned...I think what you're saying makes sense on paper, and probably works for some people, but it wouldn't work for my wife and I. I don't mean this as criticism, so please don't take it that way.
Maybe we need a FMF post on joint vs. separate accounts for married folks! Or has there been a post on that before?
Posted by: Trent D. | May 13, 2008 at 12:52 PM
Trent D. he definitely has posted about that before...
just look here (the money and marriage category) for interesting and varied opinions:
http://www.freemoneyfinance.com/money_and_marriage/index.html
Posted by: J in FL | May 13, 2008 at 01:03 PM
We went in on a lease together before getting married...but the leaving penalty wasn't too bad, so if worst had come to worst. It was a month before the wedding and we wanted to get our stuff in. Would have been a lot easier to break off than a marriage.
I knew one couple who bought a car together before the wedding. It worked out, but I also wondered how they'd split things up if they broke it off. It was "her" car...so maybe she'd assume payments? But would she pay him back for part of it?
Posted by: Mrs. Micah | May 13, 2008 at 01:32 PM
Thanks J in FL.
Posted by: Trent D. | May 13, 2008 at 01:43 PM
Sorry FMF, but I really don't like these blanket statements. I have been living with my significant other for several years. We have been together longer than my father and his new wife, and her father and his new wife. We have had two apartments and three cats together. We have one car insurance policy for both our cars. We have a joint bank account.
It is definitely a good idea to evaluate the strength of your relationship before you take out a loan, but marriage isn't the only indicator of relationship strength. If your significant other runs out on you before you get married, you really shouldn't have taken out that loan, but really, only you know if that is a possibility in your situation. Blanket statements do not apply. The decision to marry someone and the decision to go in to debt together are two different things. Sure, you have to be committed to do either, but fiscal health and emotional health are different - related maybe, but ultimately different.
We might even end up buying a house together before our wedding in August, and I would have absolutely no qualms about doing so.
Posted by: Mike | May 13, 2008 at 02:22 PM
There are a lot of interesting opinions and thoughts. This wasn't an issue because my hubby owned his own house before we even met (He has always been a saver and had a nice downpayment at 21...). When we were transferred 2 months after we got married, the mortgage broker only wanted to put the loan in his name because I didn't have a job yet in the new town and I had the student loans. He had near perfect credit and only the current house (which was quickly under contract) to his name. I'm sure it would have been the same if we had tried to purchase something before we got married. After 8 years of marriage, he has taught me a lot, and my credit is now about 2 points better than his...
Posted by: sahm | May 13, 2008 at 02:38 PM
This is smart advice. I even think you should be careful about doing things like getting into debt together after marriage. Of all the divorced people I know, money had something to do with every single separation.
Posted by: Mike | May 13, 2008 at 08:29 PM
This is a tricky situation. For every bad outcome, there may be another good outcome.
It may be useful to have some sort of written agreement when buying in joint names before being husband and wife.
Posted by: fathersez | May 14, 2008 at 12:27 AM
I personally agree with this advice. Renting together or having pets together is not the same as assuming debt for each other. I would only take on joint debt with some form of written contract; if you're married, that's a contract that already binds you and your spouse, including most assets and liabilities.
I have friends jointly signing for cars and houses, and I wonder if they have a back-up plan in case the relationship sours. I would guess most of them don't.
Posted by: Anitra | May 14, 2008 at 09:11 AM
While not applicable to me, I do know of two people who assumed debt without being related or married and it turned out badly. One is a middle aged woman who should have known better, and one is a tween who was just stupid. The woman bought a house with her boyfriend, lived with him for a few months while he cleaned her out of savings, racked up around $40k in credit card debt and then left when the cash flow stopped. Even declaring bankruptcy didn't help much; it took her almost 8 years to get back on track. The tween decided to "help a friend" by co-signing on a full-options truck when the friend didn't have the credit worthiness to get the loan himself. Eventually, his late payments and near default on the loan affected her credit; she couldn't qualify for a car loan when she needed her own car. She's still trying to get out from under that one and her prospects of moving away from home just got smaller.
Posted by: Rod Ferguson | June 24, 2008 at 05:16 PM
I wouldn't do it. The idea of dating and even engagement is to figure out if this is the person you want to spend the rest of your life with. By tying each other together with cars, real estate and even children, you can't really make the decision honestly.
Why not wait? Even if there's a good price, what will it really cost if you marry the wrong person because you have a house together?
Posted by: Cynthia | January 15, 2009 at 05:12 PM
Great post.
I was engaged to my wife when I bought my first home (condo). My wife (fiancee at the time) asked me if it's ok to put both our names on the deed... and I told her to just use my name, after all when we are married it becomes a joint asset. That worked out fine. We are happily married 2 years now and live in the same place.
-Mike
Posted by: Mike Hunt | May 21, 2009 at 09:38 AM