When it comes to purchasing a home with a partner, details must be taken into consideration. A probable break-up represents a very important aspect that you should pay attention to.
You can hope that this will never happen, but it is better to have an agreement in place. Attorneys should be consulted because they can offer you legal advice. Some details that require your attention will be presented. Firstly, remember that in case of a break-up, there isn’t a better way for designing an agreement when domestic partners are involved than asking to sell the home. No one will have to deal with financial troubles when it comes to the home or mortgage in this case. The only problem remains the way you decide to divide the proceeds of the sale. In most of the cases, this depends on the contributions of the partners, the same that applies when it comes to a business partnership.
The process you will have to deal with will be complex in case your partner asks to keep the house and there is no agreement established. You have to start by valuing the property and get an estimate. After this, the partner staying should pay the other one his part. Probably, there won’t be any means to do it. Usually, for having the possibility to pay the departing partner, the staying one opts for a home equity loan. In most of the cases, banks won’t approve this solution. The departing partner can be removed from the loan as a different solution. If you take into consideration this shaky mortgage market, you will see that this isn’t likely to happen. Removing one partner from the mortgage won’t appeal to lenders because they aren’t interested in taking repayments risks.
In this case, by refinancing the loan, the remaining partner might have the possibility to pay off the part of the other partner. Maybe you ought to let the remaining partner be responsible for the refinancing or the selling of the house in a period of time you both establish, in case you are thinking of purchasing a home. In case you face a declining market, don’t except your house to be worth the amount of money you paid when you bought it. This involves the fact that any sale will cause partners facing deficiencies when they have to pay off the mortgage and refinance won’t be a solution.
You will have the possibility to choose between two options. On one hand, you can talk about a short sale with the bank and on the other hand, your house can go into foreclosure. No matter what to do, it can’t be a good option and it might affect your credit. It is wonderful to buy a home, but remember to watch all the details. If you purchase it with a domestic partner, it doesn’t mean it can’t special, but pay attention because you don’t want big troubles if you split up. It is advisable to be prepared for different situations if you want to avoid big conflicts.