Category: Home Loan

pay off mortgage or invest

Should You Pay Off Your Mortgage or Invest Your Money?

Having a nest egg of savings gives you peace of mind. Whether you’ve worked hard to save more than you spend or recently obtained an inheritance, it can be tough deciding what to do with your money. Should you pay off your mortgage or invest your money?

Our team of mortgage brokers in Tucson at Priority Lending LLC can answer your questions about whether to pay off your mortgage or invest the money. Call us at 520-531-1119 to learn more, and keep reading to know the benefits of each decision and what factors you should keep in mind.

Paying Your Mortgage Early

Your mortgage loan likely has monthly payments that you pay off over the loan term. However, if you have enough money saved, you can pay in advance. Here are some of the pros and cons of paying your mortgage ahead of time.


  • Low risk: There’s no risk in paying your mortgage off early. If you were to invest that money instead, investment returns vary, and there’s no guarantee that your investments would make a profit.
  • Less debt: Paying off your home in full means that you’ll have less debt, helping you reach your financial goals. 
  • Smaller interest payments: The more you chip into your mortgage, the less you’ll have to pay in interest.
  • You own home equity: Home equity access increases when you pay off your mortgage.

However, choosing to pay off your mortgage over investing may lead to prepayment penalties. Your portfolio will also be less diverse, and you won’t benefit from a home tax deduction.

Investing Your Money

When deciding whether to pay off a mortgage or invest, you’ll want to be familiar with how investing your money works. Here are some of the benefits of this strategy:


  • Higher risk means higher potential reward: Investing in the stock market can yield greater returns than what you would save on your mortgage interest. 
  • Tax benefits: If you invest in certain types of retirement accounts, you can reap great tax savings.
  • Employer match: If your employer offers a sponsored retirement account like a 401(k), they might match your contributions.
  • Access to liquid assets: If you find yourself needing cash, selling your investments is much easier than selling your home.

Be aware that there are no guarantees with investing. If the stock market is strong, you may make money, but you could also lose money during bad economic conditions. Consider your risk tolerance, and act accordingly.

Important Factors to Consider

Before deciding whether to pay off your mortgage or invest, make sure you have an emergency fund, regular retirement contributions, and have paid off high-interest loans. Investing or paying your mortgage off in full before taking these steps is not the best financial move.

Learn More About Mortgages

For over 25 years, our team at Priority Lending LLC has provided Tucson homeowners with quality mortgages. Our experienced professionals know whether you should pay off a mortgage or invest and can answer your questions for you. Learn more about mortgage rates and inflation from our team. Contact us today at 520-531-1119 to learn about your mortgage pre-approval options.

what happens when a second mortgage forecloses

What Happens When a Second Mortgage Forecloses?

We know how devastating it can be when a second mortgage forecloses. Dealing with a single foreclosure is already stressful enough, and now you’ve got a second lender to worry about on top of it all. The possibility of any foreclosure can leave you stressed about your financial situation. 

The trusted mortgage brokers in Tucson have the answers for you when you want to know what happens when a second mortgage forecloses. In this blog post, we will discuss what happens during a second mortgage foreclosure, what happens with your mortgage lender, and details about the foreclosure process.

Second Mortgages 

It’s not uncommon for homeowners to take out a second mortgage alongside the initial mortgage to help cover the purchase of their home. People also take out second mortgages to cover other payment situations such as home improvements, college tuition payments, and debt consolidation. 

What Happens to Second Mortgages in a Foreclosure? 

When you have more than one mortgage out on a property, this means that your property could also be subject to a judgment lien. 

If at any point you fail to make a payment to a lender, then the lender has the right to start a foreclosure. In a foreclosure, lien priority takes place. This means your first lender for your first mortgage gets priority in payment (called a “senior lien”).

A “junior lien” would be your second mortgage lender and any outstanding judgment liens.

The Foreclosure Process

If your first mortgage lender forecloses, any funds from the foreclosure after the lender’s funds have been paid off will go to the junior liens. A lot of people believe that when a first mortgage foreclosure happens, the second mortgage has already been taken care of, but this is not always the case. The second mortgage lender’s debt obligations remain.

This means the second mortgage holder has the right to sue you based on the promissory note you initially signed if they don’t receive enough money from the first lender’s foreclosure. This isn’t an uncommon occurrence because most second-mortgage lenders receive very little from a foreclosure sale.

Avoiding Foreclosure

To answer the initial question, what happens when a second mortgage forecloses? The debt doesn’t go away. Since you signed the promissory note at the beginning of the deal, you must pay them what you owe. If they don’t get enough money from the initial foreclosure and you don’t pay them back, they have the right and opportunity to sue. 

The best way you can avoid all of this is by being properly prepared. Stay on top of your mortgage payments, however many you have, and pay what you owe. If you don’t, you run the risk of not only being foreclosed from your home property but also being sued in addition.

Contact a Mortgage Lender in Tucson, AZ

For more information about finances with mortgage debt or loans, what happens when a second mortgage forecloses, foreclosure sales, or what happens to your mortgage if the housing market crashes, contact us today at Priority Lending. Call us at 520-531-1119 or contact us online to reach a loan officer.

mortgage rates and inflation

Understanding the Relationship Between Mortgage Rates and Inflation

Many homeowners and potential buyers or sellers watch the housing market with interest, gauging the best time to act so they can benefit from the best possible mortgage rates. With inflation rising around the country, mortgage rates may suffer some side effects. Learn about the relationship between mortgage rates and inflation from the best mortgage brokers in Tucson, AZ.

What Is Inflation?

Inflation is a consistent rise in the prices of goods and services in a short time, often over weeks or months. While all consumer prices may increase due to shortages, supply and demand, or other factors, inflation shows itself by quickly outstripping worker wages. Everyone feels the impact of inflation, with many people slowing down or stopping discretionary spending.

Types of Inflation

Different circumstances cause inflation, usually falling into one of these three types:

  • Supply Side Inflation: When the supply of goods and services slows down
  • Demand Side Inflation: When increased demand causes prices to rise
  • Inflation Spiral: When shortages or high demand cause panic-buying and inflated prices

What Is the Relationship Between Mortgage Rates and Inflation?

Mortgage rates don’t feel a direct hit from inflation rates but tend to rise with increases in Federal Reserve requirements. The Federal Reserve controls the rate at which banks can borrow money from each other, which trickles down to banks changing the rate at which consumers can get loans. When inflation rises, mortgage interest rates follow suit because the banks need a higher interest rate to match theirs, resulting in higher monthly payments.

FAQs (Frequently Asked Questions) About Mortgage Rates and Inflation

Common questions homeowners, buyers, or sellers have about the relationship between mortgage rates and inflation include the following:

Can inflation affect my current home loan?

Homeowners with a fixed-rate mortgage can rest easy during inflation because their purchase contract stipulates a mortgage rate throughout the remainder of their loan. Adjustable-rate mortgages, or ARMs, don’t have this protection, so homeowners may pay more with their monthly payments as mortgage interest rates rise. If you have an ARM, check into the potential of refinancing into a fixed-rate mortgage before rates increase.

How does inflation affect home prices and sales?

Like the value of everything from food to clothing, home prices soar during inflation. However, these higher prices usually decrease interest from potential buyers, leading to fewer home purchases. Sellers may have to accept lower home bids and work harder to find potential buyers.

How can a potential homebuyer get the best interest rate?

Regardless of inflation, you can still get a great interest rate on your mortgage. Some tips for a better interest rate include:

  • Avoiding new debt
  • Maintaining a healthy credit score
  • Increasing the size of your down payment
  • Choosing a fixed-rate mortgage instead of an ARM

Get Pre-Approved for a Fixed-Rate Mortgage Today

Start your home search with a mortgage company that understands the relationship between mortgage rates and inflation. Priority Lending LLC in Tucson, AZ, has helped homeowners get the best mortgage interest rates for over 25 years. Call (520) 531-1119 for your free consultation today.

Looking to invest in business properties? Learn more about commercial real estate.

Is Now a Good Time to Refinance Your Mortgage?

Refinance Your Mortgage ApplicationRefinance Your Mortgage

To refinance or not to refinance is not the question here. Thanks to the ongoing pandemic, the Federal Reserve has kept the interest rates fairly low. But is now a good time to refinance? Unfortunately, the answer is not that simple.

Refinancing your mortgage refers to the process of taking out a new loan to replace the present mortgage. The mortgage is one of the substantial financial burdens. So, it makes sense to seize any opportunity to reduce the burden a little. That means you could refinance your mortgage and save.

With many homeowners seeking to make better use of the interest rates and refinance, it may soon be late. For example, the average interest rate on a 30-year fixed-rate mortgage was below 3% in April 2021. But by May, it has increased to 3.28% and will continue to increase. However, this increase was predicted by many groups, including Fannie Mae and The Mortgage Bankers Association.

Here is everything you need to know about refinancing:

When Is a Good Time to Refinance Your Mortgage?

Generally speaking, mortgage refinance is a good idea to lower the interest rate by at least .5% – 1%. This will substantially lower your monthly payment.

Moreover, the new loan will be based on the balance of the original mortgage. So, if you had paid some of your principal, refinancing could lower your monthly payments and save money.

In addition to that, how long do you want to stay in your home? What are your financial goals? What is your home equity and your current credit score? These factors also play an essential part in refinancing. So, if everything works out, now is a good time as any to refinance your mortgage.

Is Refinancing Worth It?

Refinancing is worth it if you use it for the right reasons. If not, it can quickly increase your financial burden. While lower interest rates may be attractive for one person, others may prefer to refinance for higher monthly payments.

While .5% – 1% makes sense, even a modest 25% makes sense if the costs are low. So instead of looking at the new interest rate, look at the broad picture. Consider how much you will save per month, how much you will save over the loan term and the closing costs.

How Does Refinancing Your Mortgage Loan Work?

The refinancing process is similar to the mortgage loan. You can replace the current loan with a new loan, often with a lower interest rate. After you refinance your existing mortgage, you will have a much favorable interest rate. Monthly payments will be lowered, and possibly a different lender than your original loan.

However, with the new mortgage, you would be resetting the clock depending on the terms. For example, consider you are five years deep in your 30-year mortgage with 25 years on the clock. If you refinance for 30 years, you would be extending the loan terms. However, if the term is 20 years, you would be able to pay off the loan sooner by five years.

Keep in mind that you’d have to pay closing costs which can be a few hundred dollars. Alternatively, they can be anywhere between 2% to 5% of the loan amount. In addition, it may include an origination fee, appraisal fee, and discount points.

According to Ellie Mae’s Origination Insight Report, the average time to refinance a conventional mortgage is about 38 to 48 days in 2019-2020. However, it can take more than a week longer than a conventional loan for FHA and VA loans.

Why Should You Refinance Your Mortgage?

Refinancing doesn’t come free. So, if you are looking to refinance your most significant debt, you better have a good reason. As such, you need to have a clear head about your refinancing goals.

Here are some of the reasons why someone would refinance a mortgage.

Save Money on Lower Monthly Payments

Refinance Your Mortgage - Save Money on Lower Monthly PaymentsEven the slight difference in the interest rate can create a noticeable impact on your monthly mortgage payments. For example, consider a 30-year $300,000 loan with a fixed interest rate of 4% and a payment of $1,567. Refinancing the loan to the same period with a 3.25% interest rate, your monthly payment drops by $134. This amounts up to $48,420 over the life of the loan.

With a lower interest rate, your new monthly payment will most likely shrink. In addition, it allows you to save money. You can put up the monthly savings against your principle. Or use it for other expenses like an auto loan or maybe your retirement fund.

However, it makes sense to pay off the home loan instead of refinancing for lower payments. At the same time, you may have to sacrifice your savings, including your retirement savings, to finish your loan first. But the advantage is that you will have a home with no mortgage payments. Now you can get back to savings and investments.

Save on Interest Costs

A low-interest rate decreases the mortgage interest you pay throughout the loan.

Both the interest rate and loan term decide how much you save in interest costs over the life of the loan. Reducing one or both factors can result in increased savings both in mortgage interest rates and monthly payments. However, you can prepay the interest in paying for mortgage points.

Ensure that you shop around with multiple lenders for better mortgage rates and terms. Before seeking a new lender, ensure that you check with the current one. They may even offer a better rate if you stick with them.

Get Shorter Loan Term

In 2019, Freddie Mac reported that 78% of borrowers refinanced from a 30-year fixed-rate mortgage to a similar loan. In addition, 14% went from a 30-year fixed to 15-year. And a last 7% refinanced from a 30-year fixed to a 20-year fixed.

Freddie Mac also reports that people refinancing their 30-year mortgages to 15-years pay less interest over a long period of time. They also shave years off your loan. On the downside, your monthly mortgage payment will increase. However, this can help save the interest payments if the property doesn’t qualify for an interest deduction.

Tap into Home Equity

With refinancing your mortgage, you can convert the equity into money and borrow it on your current loan. In such a case, the lender gives you the difference as check or cash which is called a cash-out refinance. However, the condition is that, to qualify for the loan, you need to have enough equity, at least 20% or more.

A survey by Black Knight indicates that 45 million homeowners have tappable equity lying unused. With a cash-out refinance, you can convert the equity to usable money, which you can use for investments or home improvements.

Consolidate Debt

Refinancing offers a low interest rate compared to other mortgages. Hence, it is attractive for homeowners looking to pay off debts. Since the loan allows you to tap into the equity, you can take advantage of the cash-out refinance option. You can use to consolidate debts like personal loan, credit card debt, student loans, or home loan into one single loan. Your loan balance depends on the equity you decide to cash in.

Keep in mind that if your home equity falls below 20%, you may have to pay mortgage insurance on an FHA loan.

Remove Private Mortgage Insurance (PMI)

PMI comes into the picture when you do not have enough down payment for a mortgage. It can cost you a considerable sum every month until the home equity builds to 22%. At this juncture, your lender is required to cancel it if the monthly payments are current.

However, you can get rid of mortgage insurance early by refinancing your loan. But they are an expensive option with closing costs as high as 2%-5% of the loan amount. But if you have other benefits such as a low-interest rate and short break-even point, you can opt for refinancing.

If you are stuck with an FHA loan, and you may be paying PMI for 11 months or even the life of the loan. This depends on how big your down payment was. In such a case, refinancing may be the only option.

Ability to Switch Mortgage Types

Some borrowers refinance their mortgage to convert their adjustable-rate mortgage (ARM) and lock in on a fixed-rate loan. This is true if the current mortgage rates are low and not planning to sell shortly.

In the same line, it makes sense to move from an ARM to a fixed-rate loan in certain situations. For example, this works if you plan to sell in a few years and are not afraid to take on a higher interest rate. It eliminates the fear of future interest rate hikes.

Is Refinancing a Bad Idea?

No rule says refinancing your mortgage is a bad idea. On the contrary, if done right, refinancing your loan can help save a few hundred dollars at least. However, certain factors can drive up the expenses and cost you more in the long run, so caution is advised.

Longer Loan Term – To calculate the profitability of the refinancing loan, take the mortgage rates as well as loan term for a complete picture. Do not take refinance if you aren’t saving enough.

Higher Closing Costs – The closing costs come with unnecessary fees such as loan processing and application fees. Moreover, if you cannot pay the upfront costs and instead add them to your mortgage, you’ll end up paying more.

Moving Soon – If you see yourself moving soon, it is a bad idea to refinance your current mortgage. This is because you are not likely to save enough to outweigh the loan’s closing costs.

Is it Worth Refinancing a 30-Year Mortgage into a 15-Year Mortgage?

At the beginning of a 30-year loan, most of the monthly payments go towards the interest costs. Unless you pay into the principal, you would not be able to build home equity for many years to come. Or you can refinance it into a 15-year loan. While this helps to build the equity, you’ll be taking on a higher monthly payment. If you are someone looking for a lower monthly payment, it may not be ideal for you.

With a 15-year mortgage, you are looking at:

Refinance Your Mortgage Pros and ConsPros

  • Low-interest rate
  • Low-interest costs
  • Pay off the mortgage quicker


  • Higher monthly payment
  • No flexibility
  • No leeway in case your financial situation worsens
  • Less investment and savings

However, you can refinance the current loan to a longer term and tide it over if the situation warrants it. When personal finances change for the better, you can save up and pay the principal faster.

Am I Eligible for a Mortgage Refinance?

To refinance your mortgage, you’d have to go through a refinancing process, starting with the application. FHA and VA loans qualify easier than conventional loans.

The qualifying criteria for a mortgage refinance are similar to a new mortgage. The most important of them are:

Credit Score: Most mortgage lenders require a credit score of 620 to be eligible for mortgage refinance. However, for a competitive interest rate, you need at least 740.

Debt-to-Income (DTI) Ratio: The lower the DTI ratio, the better your interest rate. However, it depends on the lender as well. Few go as high as 43% for conventional loans, while 50% for FHA loans.

DTI Ratio = Total Monthly Debts ÷ Total Monthly Income

Apart from these, mortgage lenders create their eligibility criteria. As such, there are a few other factors that lenders consider:

  • Credit history
  • Employment history
  • Payment history on the current loan
  • Home equity
  • Home’s current value

Once you meet the lender’s criteria, you’ll receive an offer with the interest rate depending on the risk you pose. However, you may not get approved or receive favorable terms if your credit history has taken a wrong turn since the first mortgage.

What to Consider Before Refinancing

Before you refinance the loan, consider why you want to refinance your mortgage. To start with, how long do you intend to stay in your home? If you are planning to move in the next few years, stop right there. Refinancing is not the right option for you.

Current Interest Rates: The success of refinancing lies in the interest rate. Even the slightest change in the rate can create a huge impact. Hence, experts recommend you interview several lenders, including your current lender, to find one suited for your current financial situation.

Mortgage Term: Refinancing to a lower interest rate can help you save money but not increase the mortgage terms. That can be counterintuitive since you end up paying more interest over the life of the loan.

Cost of Refinancing: Ensure that you stay in your home at least until you recoup the cost of the refinancing. Refinancing comes with closing costs, including the exact fees and services as when you purchased your home. So, if there is a chance that you may move before you recoup the costs, refinancing is not one of the best financial decisions.

Find the Best Refinance Rates

Just like your initial mortgage, you need to take some time and shop around for better interest rates for the new loan. Look for independent vendors, credit unions, banks, and online comparison sites. If not, you can approach a mortgage broker who can open venues that were previously hidden. They can do the legwork and get you access to vendors and better loan terms.

Make a list of preferred vendors and submit 3-5 requesting loan estimates. It has the estimated interest rate, closing costs, annual percentage rate, and monthly payment. When it comes to mortgages, you’d be better off with a loan that has a high APR, high monthly payment but no fees. Experts suggest you do not pay closing costs with cash; instead, lock it in with the loan amount. And invest the money or stash it for an emergency fund.


Refinancing is a shaky subject, to say the least. While it has its benefits, it is not without drawbacks as well. Refinance loans work well only if you focus on the long-term goals and not on the short term. Having said that, you should go for it, as refinancing could get you through a financial rough patch. A higher credit score, lower debt-to-income ratio, or increased equity could all help you qualify for a better interest rate.

Priority Lending in Tucson LogoSo, is now a good time to refinance? As a rule, the best time to refinance depends on your financial situation. With the interest rates at record lows refinancing can lower your monthly mortgage payments and increase your monthly savings.

Priority Lending, LLC has been providing mortgage loans and helping people like you fulfill their dreams since 1997. Contact one of our loan officers today to get started on refinancing your mortgage.

Unmarried Couples Buying a House

Unmarried Couple Buying a HouseEvery year the number of cohabiting is increasing. According to the US Census Bureau, there were around 18 million unmarried couples living together in 2016 (a 29% jump from 14 million in 2007), and one can only assume that the count has been increasing steadily.

Another research by the National Association of Realtors states that 9% of the homebuyers are unmarried couples.

It looks like more and more unmarried people prefer to buy houses together and not wait for marriage. However, there are many risks associated with buying a house jointly with your significant other, especially if you are not married.

There are many factors, both financial and economic, that couples need to consider before taking such a big step.

This article takes you through the information you need to know about buying a house together as unmarried couples, mortgage loans, and a few tips to help protect yourself in case of any fallout.

Can an Unmarried Couple Buy a House Together?

Yes! You can buy a house with your partner without being married. However, unlike married couples, you may want to spell out how much percentage of the house each of you holds.

You can own the home as sole ownership, joint tenancy, or tenancy in common.

Moreover, the terms of the mortgage may also vary. While few lenders allow the couples to apply for mortgages together, the others consider you and your partner as individual entities.

Joint Home Ownership: Married Couples vs Unmarried Couples

Joint ownership happens when more than one person holds the title to a property, in our case, a home. They enjoy equal rights.

Married or not, homeownership can be a decades-long obligation that should not be taken lightly. When done right, you end up with a home and good equity and credit score. But, on the other hand, you may also end up in a financial nightmare should something go wrong.

The most significant advantage is that you can easily afford a home (especially in the current economic situation) when there is someone else to shoulder the burden. With two incomes, you can easily save for a downpayment and also pay the monthly bills that come with a home.

There are a few disadvantages to owning a home along with a significant other. Firstly, you would be caught in a legal and financial crisis if your partner decides to walk away. You would have to shoulder the mortgage and bills alone until legal action is taken.

Buying a House as an Unmarried Couple

Buying a house along with your partner is a risky business. It is a major commitment that should not be taken lightly. You should take some extra steps to protect yourself.

Here is how you can buy a house as an unmarried couple in five simple steps:

Be Aware of the Risks - Person Jumping Over PitfallBe Aware of the Risks

Buying a house as unmarried couples carries more risk than their married counterparts. The reason being, there are laws that stipulate the division of assets in the case of divorce or death, but the same does not exist for an unmarried couple.

The situation becomes even riskier when two people are on the deed but one person on the mortgage. In this case, if the partner fails to make payment, the partner on the deed can lose their home and any money they put into it.

Furthermore, it can be challenging to qualify for a mortgage.

Financial Transparency

The financial health of the couple is crucial for a mortgage application. So, you should sit together as a couple and be transparent about your finances, including credit card balances, student loans, car payments, etc., before making any decisions.

  • Credit Score: The credit score, along with the information in the credit reports, play an essential part in getting the mortgage approved.
  • Debts and Income: Debt-to-income ratio helps the lender decide on your financial stability. Lower the DTI, better your chances are of getting the loan.
  • Expenses: Discuss with your partner how much he/she can put forward for the down payment, mortgage payments, closing costs, bills, etc.

In case both the partners apply for a mortgage together, they are equally responsible for the payment-so missing payments can affect the credit scores for both. So a better idea would be to save for 3-6 months’ worth of payments before you commit to buying a house.


Depending on the financial situation, you can either apply for a mortgage together or have one person’s name on the mortgage. The former is ideal if you and your partner have good credit scores, while the latter works if either one of you has a bad score.

In short, the partner with solid financials, credit score, and DTI gets better mortgage terms and mortgage interest rates.

Choose the Right Type of Ownership

One final thing you may want to come into an agreement on is the deed. The deed is a formal document that dictates the title of the home. You have three options when it comes to deeds:

  • Sole ownership – Ownership is where one partner’s name appears in the title. It can be helpful when one person has poor financial standing. However, the person whose name is not on the deed does not have any legal rights and would have to address the same in a cohabitation agreement.
  • Joint tenancy – Joint tenancy is when both the partners own an equal share in the home and are co-owners of the property. It ensures that you and your partner have equal rights to the home.
  • Tenants in common – With tenants in common, the share is decided by how much each person is paying into the house.

You may want to consult with a real estate lawyer to find the best way to hold title for your situation.

Cohabitation Property Agreement

A cohabitation property agreement is essentially a contract that dictates what happens when the relationship breaks up. It protects the financial interests of both partners. This is something you need to discuss and come to an agreement with your partner.

The agreement includes:

  • Share of the property
  • Type of ownership
  • Share of expenses
  • Division of assets
  • Buyout agreement
  • Dispute process

Questions Unmarried Couples Should Ask Before Buying a House

Questions Unmarried Couples Should Ask Before Buying a HouseAccording to a Coldwell Banker Real Estate survey, one in four unmarried couples between the ages of 18 and 34 buy a house together.

Despite that, unmarried couples have more to lose when their relationship comes to an end, especially when there is a house at play.

Since you are not treated the same as married couples, you need to ensure that you cover all your bases. So here are some important questions you may want to ask.

What Are the Laws for Unmarried Couples?

Law treats unmarried couples like individuals; hence it is up to the couples to decide how the home is handled in case of separation or death to mitigate the risks.

Prepare a cohabitation property agreement with the exit strategy, buyouts, how that property should be divided, etc.

Who Is Applying for the Mortgage?

The mortgage rates are dependent on the credit scores of both partners. So, if one person’s score is lesser, it will impact the interest rates. Hence it is best for the home loan to be on the person with a good credit score as well as DTI ratio.

What if One Partner’s Name Is Not on the Mortgage?

There isn’t much you can do if your name is not on the mortgage, but you can ensure that it is on the title of the house. However, the person who is on the mortgage is responsible for the payments.

How Will You Divide Ownership and Equity?

If the financial burden is divided evenly, the title and equity also follow the same path. However, it is not always the case. In this situation, the person who contributes the most financially has a better share.

Who Gets the House Post-Breakup?

Assets can complicate a breakup. For example, in the absence of a cohabitation property agreement, you can buy out the other partner’s share of the property, or both the partners can sell the house.

Sometimes the bank can also force the sale of the property. The same happens when one person dies. However, to take the partner’s name off the mortgage, you’d have to refinance it in your name.

How Will You Handle Household Repairs and Upgrades?

As much as this looks silly, you cannot know the compatibility as co-owners unless you address these questions. Again, these are better addressed in the cohabitation property agreement.

Things to Consider When Buying a House with Your Partner

There are a few key factors individuals may want to consider before buying a property as unmarried couples:

  • Evaluate your relationship. Are you ready for buying a house together? What would happen if you break up?
  • Ensure that you are buying a house for the right reasons.
  • Who is applying for the mortgage? The person with a better income, credit score, debt to income ratio, and financial standing will qualify for better mortgage terms.
  • Choose the ownership title that’s right for you. i.e., sole ownership or joint tenancy or tenancy in common
  • Get a cohabitation property agreement. Ensure that you plan for every scenario.
  • Determine how the costs such as property taxes, homeowner’s insurance, and HOA fees are split.
  • Discuss the future plans before making any big decisions related to your home.
  • Even if you live together, you cannot file your taxes jointly. You may have to either split what you have paid towards mortgage interest, property taxes, and mortgage insurance or let the person with the highest income take all the deductions.

Tools and Tips for Unmarried Home Buyers

  • Tips for Unmarried Couples Buying a HouseKeep track of your finances and maintain written records. Any cohabitation property agreement you may have is useless unless you have proof of who paid for what.
  • Consult with a real estate lawyer and ensure that you have the proper protection in place in case of any breakup.
  • Plan for worst-case scenarios. Ensure that you have a backup plan.
  • Consider opening a joint bank account where both the owners contribute an equal sum every month.

Types of Mortgages for Unmarried Home Buyers

Any two or more people can buy a home together and not significant others. It can be friends, colleagues, business partners, or any other qualifying individuals. You and your partner can apply for any home loan: conventional, FHA, USDA, or VA.

Here are the different mortgage options available for unmarried home buyers:

  • FHA – Considering a downpayment of just 3.5%, FHA seems to be the better option for most first-time home buyers. However, to qualify for the same, it should be the primary residence for both of you. With FHA, you need not have joint bank accounts. You also need not show proof of living together before applying for the mortgage.
  • USDA – You may want to consider the USDA loan if your property is in a rural area. Eligible properties may even get 100% financing.
  • VA – While VA allows an unmarried couple to apply for a loan, you may not get 100% financing.
  • Conventional Loans – If you and your partner have a good credit score and a 20% down payment, consider a conventional mortgage.

How to Protect Yourself When Buying a House with Your Partner

What if the relationship doesn’t work out? What if the other partner dies?

When buying a home jointly, having both the partners’ names on the title is not enough to protect you. Here’s how you protect yourself and your investment in case of any separation or death.

Before you start house hunting as a couple, get your partner’s financial information including credit cards, student loans, and other debts. You may want to make sure he/she is ready to take on the financial burden that comes with owning a new home.

What kind of title you want? If your title says tenants in common, the house will not transfer to you on your partner’s death. To ensure that you both are protected, the title should read joint tenants or tenants with the right of survivorship. With either of these, the survivor will inherit the home along with the mortgage, and other expenses on the death of the other.

Consider having a cohabitation property agreement with your partner. It should cover the legal ramifications of eventualities like:

  • What if you break up?
  • What happens if one partner dies?
  • How do you split the monthly payments and other bills?
  • What if one person wants to sell the home?


Owning a home is always an investment that pays back a long period of time. It is gratifying when done correctly.

Buying a house is a long-term venture that requires a lot of time, care, and thought process before committing. You both should be able to view it as a financial endeavor rather than being an emotional one.

You should be willing to do the homework and research your part before jumping on the bandwagon. Ensure that you consult with professionals every step of the way. That way, you can avoid potential pitfalls and move forward. Ensure that you know what you are getting into, trust your significant other, and plan for the worst-case scenario.

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