The Moneyist: I’m buying a house with my boyfriend because my credit isn’t good enough. What happens if something goes wrong in our relationship?

Dear Quentin,

My partner and I have been together for three years. We’re talking about buying a house. His credit will be what gets us a mortgage — my credit won’t. Lenders won’t consider me on the mortgage because my credit is poor from a messy split from an ex three years ago. 

I don’t want to put myself in a bad position in case something goes wrong in the relationship. I don’t want to buy a home with the person I love without having protections in place in case things go south. Then again, I know this should be an extremely happy time for us.

What can I do to safeguard myself in any type of uncertainty? What options do I have? 

House Buyer

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Dear House Buyer,

You have three choices: wait until your credit improves, put your house-buying plans on hiatus until you marry, or go ahead with your partner. Put everything in writing, anticipating all eventualities, including if you split or if one of you dies.

Assuming you buy a home together, you will be one of nearly 10% of homebuyers who are unmarried couples; over 60% are married couples, while the rest are made up of single buyers, according to the National Association of Realtors. 

“Married and unmarried couples have double the buying power of single home buyers in the market, and may be better able to meet the price increases of this housing market,” the NAR says. “Repeat buyers are also returning to the market.”

What if you split up? Who gets what furniture? If you part on bad terms, the smallest of details can become the biggest sticking points. After all, it can cost up to $50,000 to furnish a home. Even a mattress and bed frame can cost thousands.

Joint tenants vs. tenants in common

If you buy the property as “joint tenants,” you each own 50% and, should one of you die, you cannot leave your half to a third party. If you are “tenants in common,” you can decide on your respective shares, and leave your own share to a third party.

Make sure you are both on the deed. It sounds like an obvious thing to overlook, but you would be surprised how many people do just that. If you are on the mortgage, but not the deed, you are responsible for payments yet you are not an owner.

How will you divide your share of the house, if you have not contributed an equal down payment? Will one person be given the option to buy the person out? A cohabitation agreement overseen by a real-estate attorney should specify this. 

As Experian points outs: “You will need to refinance to take one person’s name off of a joint loan. Even if you move out, your name will remain on the mortgage. The loan will still appear on your credit reports.” You have been warned.

“A mortgage on a home might be the biggest financial commitment you’ll ever make,” Experian adds. “So before taking this major step, make sure you and your co-borrower have a deep understanding of each other’s financial situations.”

After having these conversations, ask yourself whether the prospect of buying a house together makes you overlook any other fault lines in the relationship. No amount of bricks and mortar will sustain or extend an unhealthy relationship.

Transparency and accessibility are key. It’s better to have a joint account to pay the mortgage, so you can both oversee and ensure that there is enough money there every month to pay the loan. Whatever you decide to do, good luck!

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