The trend for engaged couples to purchase their first home together prior to saying I DO is becoming more and more popular.  Many couples make the decision to live together for a period of time before they marry, and the question of whether to rent or buy is something that should be given a lot of thought and careful consideration. 

Whether you are married or not is not the biggest factor that is considered when applying for a mortgage.  If you have not already done so, talk to each other about finances, expectations, credit history and credit scores.  Your lender will consider both of your debt if you are applying together.  If you are not married, and one of you has a poor credit score, it might be wise to have only the person with the higher credit score apply for the loan as your credit scores and debt to income ratio determine the amount of loan you will be approved for and also the interest rate you will pay for that loan.  You might also consider the size and style of house you are interested in purchasing.  If one of you has a poor credit score or has a high debt to income ratio, it could have a negative impact on the amount you are hoping to qualify for.  The multi-bedroom, multi-bathroom home might be out of your financial reach.

Many banks will generally view married couples as one unit when the couple applies for a mortgage.  If you both have good credit scores, your chances of qualifying for the loan you need for the type of house you choose is much higher.  If one partner has a poor credit score and you are applying jointly, that partner’s financial history can affect your chances of securing a loan for the home you desire.  Even if you are married, it might be worth having just the person with the higher score apply to see how much they can qualify for alone and at what interest rate.  Keep in mind that the amount you are approved for may be lower when applying with just one income on the application, but your interest rate might be lower also.

Married or not, most couples will enter the home buying journey making fairly equal cash contributions whenever possible.  As most courts view the married couple differently than the non-married couple, this is an important point to consider.  If you are not yet married and one partner is unable to contribute equally to the down payment, renovations or any other of the numerous bills that come up, keep record of the contributions made by each partner.  Though no one wants to consider that the relationship may end before you’ve had a chance to say I Do, the partner that is able to contribute more to the home buying process needs to be protected.  Take the time to make a legal contract that will outline who will be responsible for what (expenses, mortgage, title, taxes) should you decide to part ways. 

Another point to consider is the title of the property.  If unmarried and the title is signed as Tenants in Common, both partners have ownership of the property.  If one person dies, his/her ownership will not automatically transfer to the surviving partner unless they were left the property in a will.  However, if the title has the buyers listed as Joint Tenants, the property will automatically transfer to the surviving partner.  Do your research and speak to a lawyer before moving forward to be sure you are both protected and there are no unnecessary surprises or additional heartaches ahead.