Cash & Coupling: We’re Buying A Home — But I’m Covering The Down Payment

Maybe you want to put a monogrammed welcome mat outside the door of a cute Craftsman cottage, or maybe you’re searching for a loft with a view. No matter what kind of digs you’re shopping for, if you’re in a committed relationship you’re probably shopping with the idea that the one permanent fixture is gonna be your significant other. Buying a home with the one you love is a huge commitment – one that can be even harder to get out of than marriage vows. You’re putting your credit score, your savings, and your personal space on the line. You might not be expecting your man to bring much to the decorating table – in fact, you may be desperately hoping he won’t – but realizing that he’s coming to the closing table empty-handed can be even more frustrating than his insistence on keeping that recliner.

If you’ve been following The Frisky’s articles on buying a home, you know to expect to put down 3.5 to 20 percent of the purchase price, and it can be discouraging to realize you’re the only one with cash. We talked to Dr. Tina B. Tessina, psychotherapist and author of Money, Sex and Kids: Stop Fighting About the Three Things that can Ruin Your Marriage, about how to approach a home purchase when the whole down payment is coming from you.

1. Take the emotion out of it. Maybe you bought a starter house and property inflation worked in your favor. Maybe he invested most of his savings in General Motors stock and that makes you see red. Even if he lost his shirt in a nasty divorce and you totally feel sorry for him, you need to take the emotions out of the deal. Dr. Tessina recommends treating this purchase like the business transaction that it is. “Viewing your family as a business doesn’t sound romantic,” she says, “but if you can step back from your feelings long enough to view your relationship from this perspective, your financial situation makes more sense, money problems will be easier to solve, and you’ll be able to discuss financial decisions with less difficulty.”

2. Develop a financial plan. Get your nose out of color swatches long enough to think about how to protect your cash. Even if you’re married, there is no reason that the money you saved before saying “I do” has to become communal property if you don’t want it to. And if you’re borrowing against your 401k, you’re going to need to pay that money back. You have options for how he can catch up; you just need to develop one you both can live with. “You can make a financial partnership agreement, which says that you get your down payment (plus inflation) back out of proceeds whenever the house is sold and before the equity is divided,” says Tessina. “Or, you can agree that he’ll pay the mortgage payment until you’re even, and then split it going forward.”

3. Cover your assets. Even though you don’t know what the future holds, you need to know the future of your investment. “Even if you don’t have any doubts about your relationship, you should protect yourself with a financial agreement, because the future is uncertain. Remember, if he gets hit by a truck the day after the deed is registered, his half could go to someone else and leave you stuck.” After my husband and I had been married for a year, we reviewed his will and were surprised to realize we’d never removed his brother as his beneficiary. Even though (I think) I trust his brother, it scares to me to think that if tragedy had struck I may have owed him half of the equity on our home. None of us know what curve life is going to throw, and protecting yourself doesn’t mean you love your partner any less.

4. Consider doing it solo. Tessina recommends avoiding purchasing a home jointly if you aren’t married. “If you decide to purchase a home together, however, make sure you have a formal partnership agreement, since you’re not protected by state marriage laws. If you don’t need him to co-sign, and he’s not contributing cash, there’s no need to have him on the deed. He can pay a share of the mortgage as a renter, and not own any equity.” Even if you are married, you can still purchase the home without putting his name on the deed, just realize that without him on the mortgage you may not be able to spend quite as much.

5. Make sure the law is on your side. Once you and your partner have reached an agreement, Tessina recommends you speak with an attorney. “Make sure it’s a legal agreement, and you’re both clear on what the law says. Get a lawyer to draw up whatever financial agreement you make, or it may not be worth the paper it’s written on.” Checking with an attorney will make sure you aren’t in for any unnecessary surprises down the road. “If you’re married, your house could be considered communal property in your state, meaning he owns half the property just because you’re married – unless you have a legal agreement to the contrary.”

6. Move in and move on. After you’ve worked out the details of your arrangement and had your lawyer give it a once-over, it’s time to stop talking about who paid for more of the domicile and enjoy domestic bliss. “Holding anything over your partner’s head will be toxic to the relationship,” cautions Tessina. There’s no point constantly reminding him that you paid for the majority of the roof over his head. Let it go so you can move forward … after all, you have paint colors to pick out.

Photo: iStockphoto

The Money section and all articles within it are sponsored by Free Credit Score; however, the articles are all independently produced by The Frisky and the opinions and views expressed by the writers and experts are their own.

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