Did you live with your spouse before getting married?
If so, you’re not alone.
More and more Americans are choosing to live together before getting married. According to a CDC study, 48% of women interviewed between 2006 and 2010, ages 15 to 44, had cohabitated with their significant other. This trend has been on the rise, so it’s not surprising.
When you consider the level of student loan and credit card debt some adults have when leaving college, living together may also be prompted out of financial necessity to pool resources and be able to afford living expenses while paying down debt.
A New Trend — Buying a Home Before Marriage
Did you buy a house with your spouse before you were married?
The opportunistic housing market with low housing prices and unbeatable interest rates combined with the trend for many couples to cohabitate has sparked a new trend — buying a house together before getting married.
Dr. Robi Ludwig, a psychotherapist, states, “Buying a home together has become the new engagement ring for some couples” (TIME).
Mind you, this trend isn’t for couples buying a house a few weeks or months before their wedding date, but for couples who haven’t even gotten engaged or set a wedding date to buy a house together first.
But is buying a house together before making other relationship commitments a good idea?
Drawbacks of Buying a House Together
The CDC study that looked at how many couples lived together also looked at the viability of these relationships.
In their study, they found that “40% of first premarital cohabitations among women transitioned to marriage within 3 years, 32% remained intact, and 27% dissolved.”
Divorce can be very messy, but splitting assets and a house without the legal protection of marriage can be even more difficult. Still, that is the chance that many of these couples take.
From a financial well-being standpoint, not merging finances before marriage, including buying a house together, is the safest bet.
Benefits of Buying a House Together Before Marriage
While I wouldn’t buy a house with someone without being married or within sight of the wedding date and would advise my children not to, there are some benefits for couples who would like to buy a house before marriage.
1. They can buy more house with two people’s income than one.
Not surprisingly, the trend of buying a home together is hottest in the Northeast were properties are expensive. In fact, 40% of couples bought houses together before marriage in the Northeast versus only 28% in the South (where houses are cheaper and a sense of tradition is perhaps stronger) (TIME). Two single professionals with good incomes could buy a much nicer home together than they could if buying separately.
However, if the couple does eventually marry and have children, will they be able to have one person stay home to raise children, if that is what they so desire?
If they buy a house together before marriage and children are on the horizon, there is a good chance that they will overextend themselves based on family decisions they have not yet made or perhaps even discussed. This will be even easier to do when the couple convinces themselves that they will have adequate salary increases over the years. Besides, some people may be sure that they don’t even want kids only to change their minds a few years into marriage.
2. They can’t keep their finances a secret.
While many couples have honest discussions about the state of their individual finances before marriage, I’m guessing just as many avoid the discussion and try to keep their finances a secret.
However, that is not possible if both individuals are trying to qualify for the mortgage. “It’s possible to get married without actually knowing how much money your wife earns, or how much credit card debt your husband accrued in college. Salaries, debt, and more are all on the table when the time comes to get a mortgage, however” (TIME).
3. They could achieve financial freedom sooner.
If the couple is one of the 40% who marry within 3 years according to the CDC study, buying a house together earlier in their relationship could lead to earlier financial freedom. Instead of paying rent for each of them to live in separate locations while dating or even paying rent while living together, their money is now going to paying down a mortgage. If they buy a house together at 26 and don’t marry until 30, they’re 4 years ahead on paying off a mortgage than they would be if they waited to buy a house until they married.
Finally
Throughout the United States, the rate of marriage is declining.
Buying a house together before being engaged or married is just another result of that. From a financially conservative standpoint, waiting to buy a house until being formally committed is the safest bet, but for those who want to leap into the housing market together, there are some advantages.
I bought our first house, a cheaper townhouse, outright in my name even though we lived together. However, just a couple months ago we bought our long term house we’ll be staying in for 10-15 years together. We’ve been together for 4 years, got engaged before we bought the house, and we’ve talked a lot about our relationship and the fact we would be getting married, just waiting on me. So, we’ll be married this summer and we already own a house together… worked out for us so far and I don’t see anything changing.
Sounds pretty cool Lance.
We waited until we were married before we lived together. I did get to live with my in-laws though for several month and that was something else altogether. 😉 I wouldn’t recommend our kids doing it, or do it myself, but when you look at it purely from a numbers standpoint I can see how it might make sense for some – as long as you’re ok with the possibility of risk.
The risk is the big thing.
We have a house and we are not married. However, we have been together for 7 years though and live as though we are married.
We bought our Toronto condo before we were even engaged. In some senses, buying a house together is a bigger commitment than marriage. At least until kids come along, there is more of a tangible, physical commitment to each other when buying a house, although more of an emotional and spiritual commitment with marriage.
I know many people who are together and own a house together, and live as though they are married, but have zero plans to get married. I don’t think it makes their decision to buy a home any more risky than a married couple.
If I was in a position to buy a house with my spouse, I wouldn’t consider the fact that I’m not married to be a deterrent.
If you’re planning on getting married or not planning on getting married (with both parties in agreement on this) then I think it’s fine. If there’s an unspoken (or spoken) expectation of an engagement, then I think it’s too risky because this could lead to a breakup down the road. We bought our house several months before we were married, but we’d been engaged for a year.
I think you have increased the potential for a problem. If for some reason, you break up, you will have a financial issue to deal with. You may want a contract to determine the outcome of any joint assets so it does not become an issue.