Let’s tackle a question many couples face on their journey to “happily ever after.” Should you buy a house before tying the knot or not? It’s a major milestone and one that 74% of non-married millennials would say yes to, according to WalletJoy. Inevitably, it’s a big decision that comes with plenty of pros and cons to consider, so let’s dive in and explore your options!
Pros of buying a house before the wedding
Let’s dive into the five advantages of buying a house before tying the knot. These include the excellent financial investment you may be making to creating stability and roots and more.
1. Financial Investment
Purchasing a home can be a wise financial investment over the long term, providing potential for equity growth as house prices continue to rise and create long-term stability. By buying before the wedding, you can start building equity sooner and potentially benefit from rising property values.
2. Creating a Shared Asset
Owning a home together before marriage can solidify your commitment to one another and represents a tangible asset that symbolizes your partnership and commitment to one another. Owning a home together is a shared investment that can strengthen your bond as a couple.
3. Financial Transparency
The decision to purchase a home will require open communication about savings, debt obligations, and credit scores. Such financial transparency is a hallmark sign of successful relationships. By having these conversations before your wedding, you ensure you start the journey of marriage together on sound footing.
4. Stability and Roots
A home provides a sense of stability and roots, especially if you plan to start a family someday. Buying before the wedding allows you to establish your home base early on, creating a sense of permanence and security, which is in line with how you’d want to feel when planning to have children.
5. Financial Obligations
Buying a house together will necessitate conversations around financial expectations – who pays for what and how are bills split. These conversations, which only increase in importance post-wedding date, are important to have early on in your relationship, which buying a house would naturally bring about.
Cons of buying a house before the wedding
Now let’s dig into the disadvantages of purchasing a home before saying “I do,” from financial complexity to differing priorities, it can sometimes get tricky!
1. Legal and Financial Complexity
Buying a house together before marriage can introduce legal and financial complexities, particularly in terms of ownership rights and responsibilities. It’s essential to have clear legal agreements in place to protect both parties in the event of a breakup or other unforeseen circumstances, especially since there isn’t a prenup in place. Consider putting in place a cohabitation agreement and/or prenup to iron out all the details before heightened emotions are involved.
It’s also important to understand the tax implications of homeownership pre-marriage. The IRS allows interest deductions on mortgage debt up to $750,000 for married couples filing jointly. Pre-marriage, only one of you would be able to claim that deduction.
2. Emotional Stress
The process of buying a house can be emotionally taxing, with negotiations, decisions, and financial commitments involved. Adding this stress on top of wedding planning may feel overwhelming for some couples. This is something that will vary for each couple, but it’s an important consideration nonetheless to understand how much of a stress test you want to put your relationship under.
3. Financial Stress
The average cost of a wedding in 2023 was $35,000, according to The Knot, which can already pose a significant financial burden to many couples. Adding in the financial pressure of down payments and mortgages may be too much for some couples. As always, it’s key to openly discuss your financial situation together before making any major decisions.
4. Uncertainty
Life is unpredictable, and circumstances can change. Buying a house before the wedding may lock you into a location or financial commitment that doesn’t align with your future plans or career opportunities. It will be important to discuss who is on the deed of the house to determine who is ultimately responsible for the mortgage repayments and who has the right to sell the house or take out future loans against the property if your circumstances change.
5. Different Priorities
There may be enough differing priorities to navigate in the run-up to your wedding without adding in the complexity of home decisions. While it’s always going to be important to get on the same page when it comes to housing preferences, location, and investment timelines, it’s not a decision to rush. Doing so before a wedding without thoroughly discussing and aligning on these priorities could lead to disagreements and regrets down the line.
The decision-making process: How to decide if buying a house before marriage is right for you
Now that you’re aware of the pros and cons of buying a home pre-marriage, you can now create your own list and see what other reasons you may come up with that are specific to your relationship and circumstances. With that done, how do you ultimately decide whether to buy a house before the wedding or not?
Here are a few steps to guide your decision:
- Step 1: Communicate Openly. Schedule and stick to that all important money date. Having open and honest conversations about your individual and shared goals, values, and concerns regarding finances and, specifically, homeownership before marriage is going to be key for you both. A study by Fidelity found that good financial communication not only increases financial success but overall well-being for couples, too. So, don’t shy away from those financial conversations.
- Step 2: Assess Your Financial Situation. Evaluate your financial readiness to buy a home, considering factors such as income, savings, debt, credit scores, and future financial goals. If you’re not yet in a position to apply for a mortgage or have been rejected, communicate on creating a plan to work towards your shared goal and discuss what changes need to be made. If you are ready to buy a home, discuss how confident and comfortable you both are with taking on a significant debt. This includes discussing your repayment goals, whose responsibility it will be to pay for the mortgage and for what amount, as well as exploring worst-case scenarios such as what happens if one partner’s income is cut off. Is there enough in the emergency savings fund to cover the interim payments?
- Step 3: Consider Your Timeline. Take into account your timeline for both buying a house and getting married. Are you comfortable with the potential overlap, or would you prefer to focus on one milestone at a time? Both are big life decisions, so it’s more than okay to take it step by step and not feel overwhelmed or pressured to complete everything at once. Explore all your options and make decisions based on what is realistic and best for you and your future together.
- Step 4: Seek Professional Advice. Consult with a real estate agent, financial advisor, or legal expert to gain insights into the process, risks, and potential benefits of buying a house before marriage. It is important to understand your current financial readiness to buy a home together too, as well as the legal implications of doing so pre and post-marriage. Remember, this is where a prenup can be so valuable by clarifying your financial outcomes in the event that your marriage is not a forever-after love story.
Can we include pre-marriage jointly owned property in a prenup?
If you are going to purchase a house pre-marriage, can you include that property on a prenup? Yes! If you and your partner own a home, a prenuptial agreement (prenup) can simplify how it’s handled in the future. Prenups bring clarity by stating exactly how much of the property each partner owns before marriage. They also decide how property will be split in case of separation – will it be based on who paid more or split equally or something else? Finally, prenups set expectations for financial responsibilities like mortgage payments and maintenance costs. These pre-agreed rules prevent misunderstandings and protect both partners in the long term.
Frequently Asked Questions (FAQs) about buying a house pre-marriage
Let’s get into some more detailed questions on buying a home prior to marriage.
Q: What legal precautions should we take before buying a house together?
A: Consider drafting a prenuptial agreement to outline jointly owned property ownership rights, financial responsibilities, and procedures for property division in case of a breakup. Seek the appropriate advice to support you through this process.
Q: Should we get a cohabitation agreement or a prenuptial agreement?
A: Prenups are only effective upon marriage. Cohabitation agreements may be between a couple who never gets married (and may not be enforceable in your state). If you are engaged, a prenup is likely the better route. However, if marriage is a possibility, but it’s unclear when or if it will ever happen, a cohabitation agreement may be for you. Make sure to speak with an attorney in your state to understand if cohabitation agreements are enforceable.
Q: How can we manage the financial aspects of buying a house before the wedding?
A: Create a detailed budget, establish a joint savings plan, and explore mortgage options to ensure you’re financially prepared for homeownership. By creating a shared goal and vision it will make it easier to work towards it together and make the necessary cutbacks or savings where needed.
Q: What if we disagree on whether to buy a house before the wedding?
A: Explore why this is the case during your money date together. Take the time to understand each other’s perspectives and concerns, and work together to find a compromise that aligns with your shared goals and values.
In a nutshell…
Buying a house before the wedding is a significant decision that requires careful consideration and planning. While it offers potential benefits such as financial investment and shared stability, it also comes with legal, financial, and emotional complexities. By communicating openly, assessing your financial readiness, and seeking professional advice, you can make an informed decision that sets the stage for a happy and harmonious future together.
As always, remember that every couple’s journey is unique, and there’s no one-size-fits-all answer. Trust your instincts, support each other, and embrace the adventure that lies ahead!
Laura Tynan is the founder of The Witch of Wall Street, a personal finance and investing community, where women are shown how to manage, multiply and manifest money, using simple strategies. Laura holds a BSc Hons in Finance, is a Chartered Accountant, and is certified in EFT Tapping, Breathwork, and RRT. She has been recognized by the Financial Times as a Top 20 Future Female Leader and by Yahoo! Finance as a Global Champion of Women in Business. She is a multi-award-winning speaker who has spoken at, and been featured in, Forbes. Laura hosts The Witch of Wall Street podcast and is the author of the personal finance and investing book for women, by the same name, which is available now on Amazon.
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