'It's a trend we expect to keep growing': The number of unmarried couples buying homes together is surging — but there can be serious risks involved. Here's how to avoid them

Sabina Wex
'It's a trend we expect to keep growing': The number of unmarried couples buying homes together is surging — but there can be serious risks involved. Here's how to avoid them
'It's a trend we expect to keep growing': The number of unmarried couples buying homes together is surging — but there can be serious risks involved. Here's how to avoid them

With both wedding and home costs skyrocketing, many couples may be asking themselves: marriage or mortgage?

The most recent research on the subject suggests that more unmarried couples may be opting for the latter.

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In a 2022 survey, the National Association of Realtors (NAR) found that 18% of first-time home buyers that year were unmarried couples — the highest percentage ever recorded.

And with The Knot reporting that weddings now run U.S. couples an average of $30,000, it makes sense that many opt for a secure long-term investment over a one-time expense.

“It is a trend we expect to keep growing,” NAR deputy chief economist Dr. Jessica Lautz told the Daily Mail. “Even if you're looking at your partner and thinking you're not going to be together forever you can gain financially by buying together.”

But a mortgage before marriage could hurt your net worth long-term. Here’s a few common risks when buying with your partner before you’re married — and how to avoid falling prey to them.

You may not own the house

When a married couple buys a home, each spouse owns half the home — even if both their names aren’t on the title.

But common-law regulations don’t protect you as well as those for married couples. Only eight states recognize common-law marriages and they don’t offer automatic asset sharing rights.

So if your name isn’t on the title of a home and your common-law partner’s is, you don’t actually own the home. If you break up, you have no rights to the house. You’re essentially considered a tenant.

To protect yourself, you need to be very explicit about getting your name on the title. There are several ways to ensure that you and your partner share equal rights to the property, whether that be by holding the title jointly or having separate titles.

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Your partner may not be financially compatible with you

Have you discussed finances with your partner? Do you know the depths of their debt, savings and spending habits? Do you like the way your partner treats their money?

If the answer to any of these questions is “no,” you may not be ready to invest in real estate with your partner. Some people even see buying a home as similar to marriage because of how deeply entangled your financial situations will become. “Divorces” in both cases are neither cheap nor easy.

If you’re still planning to buy with your boo, make sure to draft up a cohabitation agreement, which outlines each partner’s financial commitments to the home. In the event of a breakup, this document can work like a prenup and help you figure out the financial logistics.

You’re blinded by your desire to own a home

The median national home price is now $431,000, according to the Federal Reserve’s latest numbers. It may be tempting to buy a house any cheaper than this and see it as a deal. But ask yourself and your partner: can we afford the recommended 20% down payment?

Though NAR discovered that first-time home buyers usually paid 6% down, as financial expert Ramit Sethi puts it: “If you haven’t saved a 20% down payment, you’re not ready to buy a house.”

Sethi explains that many couples are so caught up in the fantasy of having a house that they’re thinking with their emotions rather than their wallets.

If you buy a place and can’t actually afford it, you and your partner will be “house poor”, having spent all your money on your new home. Many couples say financial problems break them up, so can your relationship withstand this?

Even if home prices aren’t as high as they once were, putting together the cash for a down payment plus all your closing costs can be a challenge. You can always eschew the house and try to find other ways to get financially involved with your partner. Perhaps you make a small investment in art together or put joint money in an ETF you’re curious about.

Whatever you do, don’t let your heart win out over your head. Your wallet will thank you.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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