Help a Reader: Engaged and Buying a Home

Here's a comment that was recently left on my post titled Big Money Blunders to Avoid: Engaged Couples:

What is the best way to buy a house while you're still engaged and prior to a wedding? First: have a joint checking? second: should I put both incomes in pre-qualified loan application to get an accurate amount of loan? I am afraid that the chance of approval decreased if the couples aren't married yet. Any advice?

Here's my advice. What are your suggestions for her?

Comments

[Matt]

Do not, do not, do not, do not buy a house until you've exchanged the vows. I'm speaking from experience and from common sense. Practice a little patience, realize that you'll be just fine if you wait just a little longer to make the HUGE decision to buy a house. Trust me, it's the smartest way to handle things.

[The Passive Dad]

Not that it's the same thing, but my wife and I rented an apartment so that we would have our first place to live together. We sat down together and figured out our budget for housing and expenses, then set the money aside in a separate account. I can't imagine buying a house when we were first engaged, as we had so many things to deal with the wedding. I would personally wait until the big event is over and save some additional money for a down payment.

[Jim]

I generally agree with Matt. Why not wait a while till you're married?

You do not need to buy a house together before marriage. Theres a real risk that something might happen before the marriage that will make jointly owning a house a major problem. Maybe you think that prices and mortgage rates are too low to pass up? Well home values and interest rates are not going increase significantly anytime soon. I don't see any reason to rush into buying a home right now if you're currently engaged.

If you're getting married somewhat soon, (within next 6 months) then you might start looking at homes now to get a good idea of the market. Then as your wedding approaches you could move closer to buying for real. You could even time a purchase offer so that closing happens a little after the wedding.

Jim

[Bryan]

Like everything else in finance...this depends on your situation. How long have you guys been together, have you lived together in the past (rented), what makes you and your finance most comfortable. Is it a situation that you both want, or is it one that wants it, and the other just doesn't want to disappoint.

[Tristan]

My wife and I bought a house more than a year before we got married. If you know you're going to be with the person forever, it's no big deal.

To answer your actual questions:

Joint checking really does not matter. They will ask for the balance of both of your and your fiance's accounts. No big deal.

Yes, put both names in if you want both names on the loan! Why not? In my particular case I may have received a better rate if I didn't put my fiance's info on there, but of course the approval amount would not have been as large. If you want an accurate representation of "what you can afford" with your spouse then put both names on there.

And finally, your chances of approval are not less than if you were already married. Of course all that matters is the information on the two applicants' credit reports.

Good luck to you, and don't listen to the naysayers if you're confident in your relationship. We bought a house because it was the right time for US, and it didn't matter that we weren't married yet.

[author]

It will be much easier to do it after the marriage (especially when you think about dealing with the bureaucracy of changing your name--having to do it on the deed, insurance policy and the loan note is going to aggravate you that much more). I know plenty of people that do it, and my husband and I considered it. Our lawyer recommended that if you buy a house before marriage, you draw up a simple document stating what happens to the property should the marriage not happen or any scenario like that if one person in the couple is contributing substantially more money to the purchase. Sounds cold, but I have a friend who ended up in a lawsuit with a former fiancee about a house they bought before getting married.

I recommend a joint account for household expenses at the least. I know a lot of people who maintain separate accounts for years into the marriage, but that never made sense for me and my husband. We still have separate checking and savings (in addition to joint), but all of our spending is from the joint account.

Do the loan together, and not being married yet shouldn't make a whit of difference on the approval.

[Kevin M]

We bought our house about 2 months before the wedding. We had a joint checking account and had lived together for about 2 years already. We used both our incomes on the loan application, but were approved for WAY more than we were going to spend. If you're committed to each other, I don't see a problem. Some of the other comments are pretty doom and gloom. If you're secure in the relationship and have done your homework about buying a house go for it.

[Walden]

My husband and I bought our condo before we were even engaged (although it was really just the formality of getting the ring) and it worked out fine. Yes, its a risk, but I'd think that the chances of a marriage going bad are proabably about the same as an engagement going bad so...
We were both on the loan app, but maintained seperate banking accounts until we got married.

If you're concerned about taking the risk but don't want to wait (for whatever reason) why not sign a simple contract stating who is bringing what to the table and agreeing on how to handle things should the engagement be broken?

[Squeezer]

having had several friends get burned when they bought a house with thier gf/fiancee and then split up and were stuck with a house payment they couldn't make, etc, get married first!!!!!!!!!!!!!!!

[David]

Speaking from my own experience, I say go for it! My only caveat is to make sure that you've already lived together.

My wife and I bought our house one year before we were even engaged. We were committed and knew we wanted to spend our lives together, so there was no problem making that plunge.

It doesn't matter if you have a joint checking account, and it shouldnt matter that you're not married as long as you're both on the loan.

What they did for our mortgage was to put the person with the higher income as the main signer, and the other person was the cosigner. That way, we benefited from the higher income and both of our good credit.

Two tips I would give: save up a down payment if you can - it'll really help your interest rate, and also, try to pay down any credit card debt you have. It will lower your debt-to-limit ratio and give your credit a boost.

[David]

A question for the nay-sayers: couldn't things just as easily go wrong after they get married, leaving them in just as bad a position? The act of marriage doesn't guarentee happiness and devotion. It's the people and the love that matters.

[JimL]

For those of us that are married, we all know how hard the adjustments are during the first few years of marriage. Why add on the burden of a house/mortgage. Most marriage counselors will tell you to not buy a home for the first two years. This is pressure that you do not need.

[forex trading systems]

I think that for first few years of living together in marriage it is better not to buy a home. It is better to rent one...

[Andy]

Seems like a lot of extra trouble to deal with right before a wedding. On the other hand, if you haven't set a date or are years away from the actual wedding you add more risk of the marriage never happening. Maybe the higher wage-earner can buy the house themselves just to be on the safe side. What are the chances you are going to stay in that house forever anyway?

I owned my house before we got married, but my case was different because I wanted to avoid cohabitation before marriage for philosophical reasons. We never even bothered putting my wife on the deed or the loan or anything. In about five years, we needed to move to a bigger house for the baby and a better job anyway.

There are a lot of houses in my area that wouldn't sell and are now looking for renters. That might be ideal. You could find your dream house together and rent until you're more stable. Then buy the house you're living in.

[Rebecca]

I bought my first place with my boyfriend last year- We're not married, and are not planning on getting married anytime soon- at least in the next five or six years. We've been together five years, and have been living together almost as long... If you know that you can put up with your fiance on a regular basis, I say go for it! The worst case scenario is that you break up (or get divorced) and go your separate ways- you still will hopefully have built some equity in your new home, and hey- there's no better time than the present- right?

[AdamCO]

If you live on either coasts or in the intermountain west, you shouldn't be buying a house at all, since it will be losing 20-30% of its value over the next year or two.

[Greg]

A big issue in purchasing before (or after) marriage has to do with state laws and how property is dealt with if one of you dies. Generally, it is a lot less hassle for a surviving spouse to get property, etc. than a fiance or boyfriend/girlfriend. Make sure you have your wills in order.

[Laura]

I bought our house just a few months before our marriage. Since my husband is in medical school and doesn't have an income, our situation was a little different because I planned to take out a loan that would be affordable with my income and down payment. I think if both of us were able to contribute, then I would have held off until after the marriage or would have had something drawn up beforehand for protection. No matter how much you love each other, whether you're married or not, I think you need to make sure that you're protected financially.

If I had to do it all over again, I probably would have found some place to rent instead, because as others have noted, having a mortgage can be a stressful thin. (And like author notes, it is a pain now that my name needs to be changed on the deed, insurance policy and the loan note.)

[dogatemyfinances]

Yes, David, it can go wrong after the marriage. The difference is that unmarried business partners (which is what this is) need partnership agreements. That means lawyers and such.

I say just wait. Or, just get married now, before the wedding.

[Erin]

I'm buying a house with my boyfriend and we already discussed what would happen with the house should we ever (sadly) decide to break up. Talk about it BEFORE you buy the house. Decide now what you two will agree to, while everything is on the up and up, so if it ever comes to that, you'll already have an agreement. See a lawyer and get something drawn up. It's not sexy...its life. I have friends that bought houses together, gay couples that buy houses together, what's the difference? It's just a house. When the day is done, if you're married and break up, you have to still deal with the house. If you're not married and break up, you still have to deal with the house. Again, its just a house.

[su]

Prior to our marriage we have our own house. My husband had his own house with joint tenancy with his mother. His mom and unmarried sister occupanied the house. From the start, we discussed that my house is for investment purpose and when times is right I will sell and we will then combine to buy our first matrimonial homes. From the start we are married he lives in my house, he does not contribute to the mortgage or utilities, I don’t even get any pocket money from him. He only pay my son child care fee and our meals. When comes to monetary he is very sensitive. He does not want to share any monetary or not even the type of insurance he has. One thing for sure is that he certainly earns more than me.
We had a son of 5years old and we are married for 6years.
In the past when I brought up the issue he would accuse me of chasing his ma out of his house. I told him that his elder sister is capable to own her own house and moreover when we just got married she stated that she would buy her own house and live with her mother and return to him.
Our marriage is on the rock due to poor communication, lack of commitment when comes to money and his foul temper had sour our relationship. I have tried many attempts that we need to see a marriage counselor or to have a heart to heart talk. But he treated me ‘transparent’ as if I am talking to the wall.
Infact, even though he is not using his car he will not even lend his car to me for half a day!
I am lost, I am considering divorce but I am thinking for a poor child!
Can someone enlighten me?!!?

[FMF]

Su --

I'll post your question in a couple weeks. Stay tuned.