Owning a home is a life goal for most people — paying off your home is even more of an achievement. But, what happens if you get a new partner? Should you add them to the deed or not? How could this impact your future?
Consider a 50-year-old who now owes $80,000 on a refinanced mortgage. The finish line is close! Now, your boyfriend wants in — not just to live there, but to help you financially by buying half the house. He’s offering cash and says he’s ready to get married. You love the idea of partnership. You’re also hesitant, especially after getting burned in a past marriage.
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What do you do? Letting him purchase half the house would ease the financial pressure, but are you setting yourself up for legal and emotional headaches down the road?
The pros and cons of adding a partner to your deed
There’s no question that the cash from a life partner can help. If he buys half the home at market value, that could easily pay off your remaining mortgage and leave you with some financial breathing room. You’d still have a home you love with someone you care about. But, it’s not without risks.
Let’s look at the pros and cons to determine if this is a good idea. The pros include:
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Financial relief. Selling half your home could allow you to eliminate debt, invest or save for retirement.
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Shared future responsibilities. With two owners, costs like taxes, big repairs and maintenance can be split, making them easier to manage.
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No need to move. Selling and buying together is an option, but if you love your home and bought it at a good time, it makes sense to stay.
But there are financial and legal downsides, too — especially if you aren’t yet married. Here are potential cons to keep in mind:
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Loss of control. You’d no longer be able to make big decisions about the property on your own. If you want to sell, borrow against the property or make significant upgrades, you’ll need your partner’s agreement.
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Potential to lose the home if you break up. Once your partner’s name is on the deed, they become a full co-owner. If things sour, you may have no choice but to sell if they want out.
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No protections of marriage. If you’re not legally married, you don’t have the same property rights or legal safeguards that married couples do. In the event of a breakup or death, there’s no automatic right to inherit or buy the other person out.
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Risk of unequal investment. If one of you pays more towards the mortgage, taxes or repairs, those contributions might not be fairly reflected unless you clearly define ownership shares.
In general, adding an unmarried partner to the deed of a home you already own is risky. The chances of things going wrong if you break up — or even if they pass away — can be high.
For example, if your partner has children from a previous marriage and passes away, you could end up co-owning a home with their children. If they want to sell, you may not have a choice in the matter unless you can afford to buy them out.
However, if you do decide to go forward with this plan, consider a cohabitation agreement to get the details, like who pays for what and what happens if the relationship ends, in writing. Vague promises and handshake deals won’t cut it.
Here are some questions to answer before moving forward.
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Is he paying half of the current market value?
If he’s offering 50% in cash, it should be for the current value of the home, not what you bought it for however long ago. That equity is yours, so make sure the deal is fair to you.
Will he be added to the deed and the mortgage?
You can technically sell part of your equity without refinancing, but if he wants true co-ownership, adding him to both is cleaner. Just know that refinancing could cost you that great interest rate.
Are you planning to get married?
If you plan to get married, it’s better to wait until after the wedding. That will ensure you have more protections in place. Make sure to research the laws in your state regarding marital assets.
What will happen if things go south?
Decide now how you’ll handle it if things go wrong. Can one of you buy the other out? Will you sell the house? How will the equity that may accrue be divided?
Bridging your partner in on your biggest asset is a big decision. In most cases, it’s not a good idea unless you’re at risk of losing your home. Done thoughtfully, though, it can be a way to build towards a better future together.
Above all else, talk to a lawyer. This is not a process you want to manage on your own. And if you do move forward, treat it like a business deal: protect yourself legally and make sure both your hearts and paperwork are in the right place.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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