Few things are as monumental in one’s life as signing on the dotted line for a six-figure home loan. It’s up there with marriage, having a child or even dealing with the loss of a friend or family member. When we think of the American dream, the traditional path of life past generations were expected to follow was to get married, buy a house, and have kids, but now millennials in relationships are ready to take the next step and we’re not talking about marriage.
Despite the potential legal and financial risk associated with purchasing a home with someone you have no legal ties to, more and more millennials are making the decision to prioritize a mortgage before marriage. A new survey of 600 millennials conducted by The Black Tux reveals that 57% of millennials purchase their first home after getting engaged — this number represents a fairly large chunk of our millennial population making the leap into homeownership before they say “I do.”
In recent years, attitudes surrounding marriage and cost of living with millennials have shifted gears completely. Young folks are getting married later in life – or not getting married at all – finding it to be less important than previous generations made it out to be. The same goes for weddings, as more and more millennials flock to the courtroom or elope instead of shelling out thousands for a wedding that could be used for a down payment.
Higher cost of living is also another factor that plays into millennial homeownership with rent in many major cities have skyrocketed in recent years. Couples fed up with paying thousands of dollars in rent each month and getting nothing in the long run turn to homeownership as a wiser financial decision.
With nothing legally tying you to your significant other during the homebuying process, it’s crucial to consider the risks in the event of a breakup or called-off engagement. It’s wise to draw up a legal contract with a lawyer to determine the logistics in the event the relationship ends. What might seem like a headache now or even pointless for some, will pay off in the long run if things go awry. According to Bankrate, here are a few things to include when drawing up a cohabitation contract:
- Type of ownership on the deed (joint tenancy with rights of survivorship or tenants in common)
- Percentage of the house each party owns
- Payment responsibility
- Buyout agreement
- What happens if there’s a job transfer
- Dispute process
- Exit strategy
Bankrate also states that the law treats unmarried couples like individuals when it comes to real estate and other assets, which can be a pretty scary realization to come to terms with. Although, when it’s all said and done, it’s not right or wrong to pursue homeownership with your significant other before marriage. If it’s something you’re considering at the moment, go for it if it feels right and you’re financially ready. The most important takeaway here is for both parties to cover all bases before taking that big leap into homeownership.