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Smart Money Podcast: Home Affordability, and Unmarried Partners Buying a House
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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
This week’s episode starts with a discussion about a new first-time homebuyer report from NerdWallet data journalist Liz Renter.
Then we pivot to this week’s question from Scott in Green Bay, Wisconsin. He wrote us asking about buying a home:
“My girlfriend and I are planning on buying a house. Is there a financial advantage to have the mortgage under both of our names or should it be under one name. I do have a higher credit score, so I’m assuming the house payment should be under my name. Thanks for your help!”
Check out this episode on any of these platforms:
The market is tough for first-time home buyers right now. Inventory is low, prices are high, and the market doesn’t seem likely to improve any time soon. If you’re set on buying a house right now, set realistic expectations — but don’t compromise on your must-haves. Even if you end up in a bidding war, don't skip a home inspection just to get into a new home.
If you are thinking of buying a house with a partner you’re not married to, start by understanding each of your financial circumstances and what they may mean for your home buying options. Credit scores above 740 will generally allow you to get the lowest interest rates on a mortgage and private mortgage insurance premiums. Also, look into FHA and VA loans when shopping around and take advantage of first-time homebuyer programs.
Buying a house with a partner you’re not married to is feasible, but cover your legal bases. Talk with a title agent or real estate attorney about your options. You could establish sole ownership, where one party owns the house, a joint tenancy agreement, which is a 50-50 split in ownership, or a tenants in common, where parties have unequal ownership. Setting up a will for each party, to define what would happen to the shares of a house if one party dies, is also a good idea.
Compare your loan options. FHA and VA loans (if you are eligible) might offer an equitable deal if you prefer both borrowers on the mortgage.
Know how to structure the paperwork. It's possible for the mortgage to be in one name and for title to be in two names.
Cover your bases, financially and personally. Have a deep conversation about how to structure the title, and get personalized advice from a real estate attorney or maybe a title agent.
More about home buying on NerdWallet:
Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.
Sean Pyles: Welcome to the NerdWallet Smart Money Podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Pyles.
Sara Rathner: And I'm Sara Rathner filling in for Liz Weston, at least for the start of the episode. To contact the Nerds, call or text us on the Nerd hotline at 901-730-6373. That's 901-730-NERD. Or email us at [email protected]. Hit that subscribe button to get new episodes delivered to your devices every Monday. And if you like what you hear, leave us a review.
Sean: This episode, Liz and I answer a listener's question about getting a mortgage with your partner when you're not married. First though, in our This Week In Your Money segment, Sara and I are talking with another Liz, NerdWallet data journalist Liz Renter, about her latest study into what it's like out there for first-time home buyers.
Sara: I will say, sometimes we collectively refer to you as the Lizzes.
Sara: I'm excited to speak to 50% of the Lizzes today.
Liz Renter: Nice. I'm super excited to be here, guys.
Sean: Yeah, it's always great to have you on, Liz. So to start, home prices are on the rise and I'm hearing a lot of stories about would-be home buyers putting in offers without even getting inspections on the house that they would buy. And starting off this conversation, I feel a little bit like a nervous patient awaiting some bad news from my doctor. So, what is your prognosis for first-time home buyers right now?
Liz R: It is a very tough time to buy for anyone, but it is extremely tough to be a first-time home buyer, because first-time buyers typically have smaller budgets, a shorter credit history, so they kind of have less of an advantage going into the market. These interest rates that we're seeing are very, very enticing, but finding a home within your budget is going to be the hard part.
Sean: So we can break down a few reasons why that is, and I know that you analyzed the affordability of 50 different metro areas across the country. What trends are you seeing?
Liz R: I think the big trends that we've really been seeing for the past year consistently every time I do this analysis, is that prices are up and climbing and supply is low and not getting any better. If you guys are like me, I just bought a house in December, but I am a nut about looking at houses so I'll frequently get on Zillow on my lunch break or whatever. The lack of supply right now is noticeable. I mean, in my analysis, I found in Raleigh, North Carolina, for example, listings are down about 75% year over year. So people that were getting on their listing apps over their lunch break there last year, they were seeing about 4,000 listings before they put their filters on. Now they're seeing about 1,000. You notice that decrease.
Sean: And that's because people are buying more or trying to and construction just can't keep up.
Liz R: Yeah, exactly. The pandemic definitely took a problem and made it worse.
Liz R: Some of the demand and supply issues we're seeing now were there before the pandemic, but some of them are definitely new. We had a good portion of last year and probably still this year to a certain extent where people don't want to put their homes on the market because they still don't feel completely safe about people coming in and out.
Sara: You put your home on the market and then what do you buy to move into?
Liz R: I mean, there's no supply so where are you going to go? And I think that has a lot of people staying put.
Sean: I was talking recently with someone about how the idea of a starter home is dead. I feel like millennials are going to buy one house and stay in there until they die, because what else would we do? We can't go anywhere else. Add on to the house that you have, but getting something else just sounds too difficult.
Liz R: I joke that I rented my starter home and then I bought my first home at 35 and I made sure to buy a big enough house that we could grow into it if we chose to. Or if we decided not to grow and we decided to downsize, at least we have this nice big house we can sell and it will give us the equity to put into something smaller. A lot of people are waiting longer and there's nothing wrong with renting. People think it's throwing your money away, but it's not. It's still a roof over your head.
Sean: You're paying for flexibility.
Liz R: You are. And you're paying for somebody else to do the maintenance. Oh man, I miss that.
Sean: I know. Around this, what would be your guidance for first time home buyers who were really looking to buy right now?
Liz R: I would say the very first thing they should do is give themselves a tough talking-to and be like, "Is this really what we want right now?" Because, like I said, buying a house no matter when you buy a house is a stressful experience, but buying a house right now is going to be tough. People are thinking about sending their kids back to school, going back to the office. There's already a lot going on. And the question isn't just, "Do I want to buy a house? It's, "Do I want to go through the process of finding and buying a house right now?" Because it's going to add a lot of stress to your life. Now, if the answer to that is, "Oh yeah, I'm totally easy going. I have the money. I'm ready to do this. I know what to expect," then fine. Just be prepared before you start the process that this is not going to be easy.
And then one other thing I would say at the beginning is set completely realistic expectations. Know that you're likely not going to get the house that checks all of your boxes. This is not the time to go hunting for your dream home or even your dream starter home. Because if you do find a house that checks all those boxes, chances are other buyers, it's checking their boxes too.
Liz R: And so there's going to be a whole crowd of you competing for this.
Sara: Yeah. I mean, you're seeing houses go under contract within days of being put upon the market.
Sean: It's so competitive right now, but I think there is a balance between lowering or right-sizing your expectations, but not sacrificing your standards entirely. Because there are a lot of people right now, as I mentioned, that are buying houses, putting in offers on houses where they haven't even done the inspection, and so they could have an issue with the foundation and they could just be getting themselves into a contract on a home that's a big money pit.
Liz R: Exactly. And so yeah, we definitely caution at NerdWallet, do not waive your inspections. Get your inspections done. Yeah, it could mean the difference between getting a house and not getting a house, but do you really want to win that battle if when you get in there, like you said, it needs foundation work or the roof needs to be replaced? Because you'll quickly find yourself in over your head.
Sara: So I will ask though, if you're in a competitive market and there are multiple offers on a house, if you're the one insisting on an inspection, even if it's just informational, which means that you're assuming the cost for whatever is found, I mean, you're going to lose out to other buyers who are walking up with all cash who are waiving inspections. I mean, what do you do? If that's the hill you're willing to die on, what's going to happen?"
Liz R: What's going to happen, Sara, is, you're probably right, you probably won't get that house. But what we recommend is that you make your offer speak for itself. You let not only the dollar amount be the thing that lures the seller in, but the terms of the purchase. Because as I said, buying a house is stressful, selling a house is stressful, so what can I do for this seller that's going to make this as easy as possible? And that may mean letting them choose the closing date, giving them extra time after closing to move out, those sort of things. But don't take those risky steps. Maybe if it's brand-new construction and the person has only lived there for a couple months, but even then, I would strongly caution against it.
Sean: Another thing you pointed out in your report is that there actually was a slight increase in inventory from Q1 to Q2 of this year, but it wasn't really enough. Can you talk about that?
Liz R: We did see a small average increase in listings from Q1 to Q2, but we're talking about 2% on average. That quarterly increase is a drop in the bucket when we know that listings are still down 50% or more year over year. In the scheme of opening up your Zillow app, like I said earlier, you're not going to notice that 2% increase. As I said, if you're going to get into this market, you need to be flexible. You need to know the things that you're willing to compromise on and the things you're not. And that includes how many bedrooms you want, how many garages you want. Because, again, there's slim pickings out there and everybody's competing for the same houses.
Sara: So we talk a lot about home prices going up, but some metro areas dip in prices. But does that tell the whole story?
Liz R: That's a great question. So we did see a couple of metros where prices dipped, and the important thing here is there's a lot of volatility in home pricing when you look at short-term changes, so month over month and quarter over quarter. In Los Angeles, for example, there was a 10% decrease in list prices from Q1 to Q2. But if you step back and take a broader lens towards that data, you find that there was actually a 19% increase from Q4 to Q1. So this 10% drop in Q2 is not really all that remarkable. Also, Los Angeles has been the least affordable metro area in our analysis every single time we've run this analysis, and this past quarter, homes were listed at 13 times first-time home buyer income on average.
Liz R: Yeah. So it's important when you look at these numbers, you step back and try to get a full picture of what's been going on in these areas.
Sara: I mean, it's hard to tell on a podcast, but my jaw actually dropped when you said that. I was just sitting there open mouth like, "13 times! How does anybody do this?"
Liz R: Yes.
Sean: For context, we typically recommend people look at homes around three times their annual salary as a gauge of affordability.
Liz R: That's a good starting point. Obviously, as you get further and further along the homebuying process, you refine what your budget is. But when you're first thinking about buying, we do stick to that old rule of thumb that says "three times your annual salary is a good place to start looking." Now, first time home buyers may have to increase that a little more.
Sara: They're going to have to increase it a whole lot if they're shopping in Los Angeles.
Sean: There's such a hard balance between wanting to get in on the market right now when things are still going up and waiting. In my experience, I bought a home. I put down a deposit on a new-built home about a year ago, and it sold for a price that I could actually afford, which I was shocked by. And the same model of the homes sold in June for $80,000 more than I paid, which means that I wouldn't even be able to afford my own home if I was to try to buy it today.
Sara: I wouldn't be able to afford my own home. I bought my house fall of 2019. It was a little bit pre-pandemic, not knowing yet at the time what was coming. I couldn't afford to buy in my neighborhood now.
Sean: I think it speaks to how there's definitely an element of luck and chance and circumstance that goes into home buying nowadays. I have some friends out in Portland that are trying to get into a rent-to-buy plan with their landlord because they've been renting this house for a number of years. The owner wants to sell it and will only really want to sell it to my friends that are renting it. That is very hard to come by, but it's how they would possibly be able to buy a house.
Liz R: Yeah, that is incredibly fortunate. Another way to increase the likelihood that you're going to end up in a reasonably priced home that does check your boxes is to really expand the circumference of your search. So, for me, I bought in Kansas when I was living in North Carolina. That's not possible for everyone — not everybody can be like, "Oh, I'm just going to leave the state." We may see more people than before able to do that because more people are working remotely indefinitely. They might not have to worry about a commute anymore. But for people that are tied to a commute, changing locations that dramatically then becomes a conversation of, which is more valuable to me, becoming a homeowner or staying in this job forever?
I could foresee some situations where, “You know what, a lifelong goal of mine is to own a home. I really like my job, but I don't plan on retiring from this job. Maybe I need to consider not only relocating, but looking for another job as well.” So I don't feel like that thought process would have been nearly as common three years ago, four years ago. Some tough trade-offs to think about.
Sara: Definitely, anyone with school-aged children, you question, do I want to move school districts? Do I want to move my kids?
Liz R: Right.
Sara: When is a good time to move my kids and have them switch schools? That can be a really tough decision for families who want consistency, especially after such a tough time with virtual schooling this past year-plus.
Liz R: Right, and I think, Sara, that speaks to why a lot of current homeowners aren't selling, is because they do have children, because this whole year has been so stressful already, like, "Why would we want to add that to the mix? Let's just wait for things to calm down," and we're all holding our breath for things to calm down.
Sara: If you live close to a family or friends that help you with child care, it's really hard to leave that village and move to maybe a city where you don't have the community that you need to get everything done. Grandma can come down the street and watch your kid in virtual school because there's been a COVID exposure in their classroom while you work. I mean, parents are making really tough choices this year, and I feel for anybody that's just in the middle of making this type of decision.
Sean: So, as we just laid out, it's a pretty bleak picture for home buyers new and seasoned right now. Are things looking any better for 2022?
Liz R: That's the million-dollar question, Sean. Maybe slightly. So much depends on what happens with the pandemic and what happens with the broader economy. What I can say is prices can't continue this dramatic upward motion forever. While it's highly unlikely that we'll see a crash where both prices and home values sink, what we are more likely to see is that these prices will level off and they'll stop growing at such a rapid pace, or they may decrease a couple percentage points in some markets. I don't think we're going to see any dramatic swings within the next year, but we may see things slow down and possibly start to go the other direction. The other thing is control of the pandemic will also help people feel more comfortable putting their own homes on the market. It'll go a long way in clearing supply issues plaguing new home construction. So all of these things will help boost supply and provide a little bit of relief.
Sean: But the big unknown is when that will happen.
Liz R: Exactly.
Sean: Well, Liz, thanks so much for talking with us.
Liz R: Yeah, absolutely. Thanks for having me on again.
Sean: Now let's get to the conversation with the other Liz about getting a mortgage with your partner when you're not married.
Liz Weston: This episode's money question comes from Scott in Green Bay, Wisconsin. Here's their question. "My girlfriend and I are planning on buying a house. Is there a financial advantage to having the mortgage under both of our names or should it be under one name? I do have a higher credit score so I'm assuming the house payment should be in my name. Thanks for your help."
Sean: This is actually a dilemma that my partner and I experienced and talked through a lot at great length when he bought his house about two and a half years ago. So I am interested in answering this with the help of mortgage Nerd Holden Lewis.
Liz W: Hey, Holden. Welcome back to the podcast.
Holden Lewis: Hey guys, it's a pleasure.
Sean: Great to have you back as always. So there are a few things going on in Scott's question. It's about how to structure a mortgage with a partner when you're unmarried and also how credit impacts the mortgage process. So what are your thoughts?
Holden: Definitely, I see this as a two parter question. In the foreground is a mortgage question and then lurking in the background is an ownership question. So let's tackle the mortgage one first. As Scott probably understands, it's sort of implicit in his question, a lower credit score brings you a higher interest rate, and also you end up paying higher private mortgage insurance premiums. And I'm boldfacing the word "private" when I say that, and I'll explain why later. So you pay more with a lower credit score. And when there are two people getting a mortgage together, it's underwritten based on the lower credit score.
Sean: Mm-hmm (affirmative).
Holden: Look, if you have a credit score of 740 or higher, you're going to get the very best interest rate. Then there's tiers below that, like 700 to 739 and 640 to 699, where you're paying increasingly higher interest rates for the mortgage.
Liz W: Holden, do they still do it where they pull your credit scores from all three bureaus and then use the middle one?
Holden: Yes, that's exactly what they do. So they take the lower middle credit score and they underwrite the loan and the private mortgage insurance premium based on that one.
Sean: OK. This is another example of how costly it can be to have a low credit score, right?
Holden: Well, yes and no, because let's talk about the FHA. When you get an FHA loan, you're getting a mortgage that's insured by the Federal Housing Administration, and the mortgage insurance premiums on FHA loans do not vary based on credit score. So let me repeat that. If you have a low credit score, you pay the same premium on an FHA loan as if you had a higher credit score. So what that means is, if the two of them get a loan and it's an FHA loan, their premium will not be higher simply because Scott's girlfriend has a lower credit score.
Sean: OK. So that's for their mortgage insurance, but their interest rate could be higher because of that lower credit score, correct?
Holden: Au contraire. That's another benefit of the FHA. You might pay a slightly higher interest rate on an FHA loan because of that lower score, but really, you don't get dinged very hard on FHA loans on the interest rate. Essentially, you're getting pretty much the same interest rate on an FHA loan regardless of credit score. Like I said, really great deal. And let me bring in the VA too. So when you get a loan, that's guaranteed by the Department of Veterans Affairs, it's technically not mortgage insurance, but it acts like mortgage insurance. And, again, the VA guarantee fee does not vary based on mortgage insurance. A VA loan is a really good deal because you can get it with zero down, the fee you pay does not vary based on credit score, and, of course, you have to be eligible for a veteran's loan.
Holden: So one of them, Scott or his girlfriend, would have to be a veteran or active duty to be eligible for a VA loan. But if one of them is, that's a really good deal. The one caveat is this, if one of them is eligible for a VA loan and the other isn't, for them get the loan together they would have to get married. Otherwise, it would just have to be in the name of the person who's eligible for the VA loan.
Sean: OK. So this seems like pretty good news for Scott and his girlfriend. How can they make sure that the loan they're applying for is an FHA or a VA loan?
Holden: It's really simple. You just tell the loan officer that that's what you want, FHA or VA. And there's a lot of VA specialists out there. One thing I would suggest is just to look that up. We have reviews and roundups of VA and FHA mortgage lenders on the NerdWallet website.
Liz W: There are downsides to these loans, right?
Holden: If you have a credit score of 740 or higher and you get a conventional loan and you have to get mortgage insurance, that's going to be a pretty good deal. Private mortgage insurance, if you have a credit score of 720 or 740 or higher, it's going to be lower than with FHA.
Sean: Mm-hmm (affirmative).
Holden: But if your credit score is below 720, you're actually getting a better deal on mortgage insurance if you get an FHA loan.
Liz W: I guess what I meant is, you can't get rid of the mortgage insurance on an FHA?
Holden: With an FHA mortgage, you can't get rid of the mortgage insurance payments that you pay every month unless you refinance into a conventional loan. When you get private mortgage insurance, you can cancel those monthly premiums after you have 20% equity in the home.
Liz W: Yeah, I was thinking about that because here in California, where we're used to prices shooting up, people get equity pretty quickly, and then they contact their lender thinking they can get rid of their mortgage insurance and find out, "No, you have an FHA loan. That's baked in."
Holden: Yeah, that's very true. And one little side note on that is that lenders do want to "season" your loan for a couple of years before you can get rid of private mortgage insurance. So let's say your equity rises really, really fast and suddenly you have more than 20% equity in the home, but you've had the loan for, say, one year, your lender is going to say, "Nice try, but you can't cancel it until you've had this private mortgage insurance for two years."
Liz W: Interesting.
Sean: Interesting. I thought it was an either/or situation where you hit around 20% of equity or you are at that two year mark or so, but that's not the case.
Holden: Yeah. Unfortunately, it's an "and" situation.
Sean: OK. Good to know. All right. Well, one thing I'm wondering about is whether there would actually be some advantages for Scott's girlfriend to not hop on this mortgage. What do you think?
Holden: I'm interested in what Liz has to say. There's one thing I can think of is that she will have more capacity to borrow in the future. If she doesn't have the mortgage in her name, then she basically has more room to borrow, like to get a car loan in the future or even another mortgage or credit cards or student loans.
Sean: Mm-hmm (affirmative).
Liz W: Yeah. That's a really good point. The other thing I was thinking of is, they may need her income to qualify for this loan. So they may not have a choice. If they need both incomes to show that they have capacity to pay back the loan, they could wind up having to get a mortgage together.
Sean: Yeah, that's a good point. But at the same time, I think that that is an area where they should maybe be a little bit cautious. I remember when my partner was shopping around for mortgages for the house that we have here in Portland, and we got a certain amount that he could get with just his income, and then they added mine in and suddenly we were offered a loan that was much more than we could realistically afford without being house-poor. So don't get roped in just because you could potentially afford a bigger house with both incomes.
Liz W: You could have purchased the Pittock Mansion, basically?
Sean: Pretty much, yeah. And he said, "We'll pass for a couple of years. Let's see how this goes."
Liz W: Very smart.
Holden: When my wife and I bought our first house, we did that on purpose. We qualified based only on my income, partly because we had a toddler and we wanted to give her room to quit. But also, we just didn't want real estate agents to get bright eyes and started showing us houses that we would have to stretch to buy. We just figured, "This will actually be discipline for the real estate agents to show us houses."
Liz W: That's great. I never thought of it that way.
Sean: Well, this is also an excellent opportunity to plug a calculator that we have that can show you how much house you can afford. And I think that's a good tool to use before you really start the mortgage shopping process so you get a realistic understanding of within your budget what you can realistically pay. But at the same time, one thing I'm thinking about that's a trade-off for Scott's girlfriend who is probably looking to improve their credit is that, if they're not on this mortgage, they won't really benefit from the steady repayment of that mortgage, right?
Holden: That's right. Paying that mortgage on time every month for a couple of years, all things being equal, will work wonders for the credit score. So if she is on that mortgage and they pay on time for a couple of years, it really, really should boost her credit score if she's paying the other bills on time too. I mean, it's a great credit repair tool to have a mortgage that you pay on time.
Liz W: I just want to drop in that we don't know that she has bad credit. He just said he has a higher credit score. So he could be 780 and she could be 775.
Liz W: Speaking as someone who's been in a long-term marriage, those few points can make a lot of difference. Just to us though, not to a lender.
Sean: Yeah. And it can be really worth talking through this with a potential lender and having them run the numbers in a few different ways to see what all your options are. It's not like they can only do it one time. They can see what your loan would look like if you are together or if you're separate. That way, you can really compare and get the best deal for what you want out of your loan, out of your budget, and out of your other financial goals.
Holden: I'm so glad you mentioned that, Sean, because I think that a lot of questions we get about personal finances are from people who think that they have a really unusual or unique situation. And this situation is far from unusual. Loan officers get a question like this all the time. There's a lot of mixed borrowers, and what I mean by that is one person with a credit score of, say, 750, and someone with a credit score of 710. Loan officers are accustomed to answering these questions and you should be able to get a straight answer with a good loan officer.
Sean: Yeah. And the thing is, this is their job to answer your questions. A mortgage is probably the biggest loan these people will take on in their lifetimes. And because of that, I think it's very worth asking as many questions as possible. That was what I did when I got my mortgage, and I was probably a little bit annoying to my mortgage lenders. But, hey, it helped me save some money in the long run, it helped me really understand what I was getting myself into, and make sure that I was confident in my decisions.
Liz W: Good for you, Sean. OK, Holden, we've been talking about how to do the mortgage, but you said there was another issue underlying that one. Can you talk about ownership?
Holden: Sure. Oh boy, ownership. Regardless of who's on the loan, you can have different people listed as owners. So what I mean by that is, Scott could be the only person listed on the mortgage, but Scott and his girlfriend could both be co-owners of the home. And there are several ways to do that. Well, first of all, there's sole ownership where Scott just owns the house all by himself. And then there's something called joint tenancy where it's a 50/50 split, and then if one of them dies, then the other just automatically has 100% ownership. And then there's something called tenants in common. That's tenants like an apartment tenant plural, tenants in common, and that allows unequal ownership. You could split it 60/40, 70/30. You could even split 50/50. With that style of ownership, you have to describe in a will what happens to that person's share if one owner dies. I mean, well, let's just say it's prudent to have that described in a will.
And to decide, I think that you really have to have a deep, calm conversation and you talk about, "What happens if we split up? What happens if one of us dies or becomes disabled?" You might want to talk about children, what if you have children and what are you going to want to do then? Make that decision with preferably consulting with, say, a real estate attorney or probate attorney or even a title agent.
Sean: I think that's a great point, because, again, this is such a large financial decision. It's a very large loan. You want to make sure that you have all of your bases covered no matter what you want with your partner and what could happen in life because you don't really know.
Liz W: I owned my first house as tenants in common because it was two friends and I that bought the house together. And the primary reason that we did that was because each person could leave their share to someone else. But as Holden mentioned, there's a lot of permutations to this, and one that pops into my mind is that, if Scott is the only person on the mortgage and on the deed and the girlfriend is contributing to the mortgage or helping pay for repairs or helping pay for maintenance, she really does need to have some sort of ownership in that house. It shouldn't be just her money's being used to build his equity. Does that make sense?
Sean: Yes. And that is actually what Garrett and I did, even though it's technically what we maybe shouldn't have done. But now we each have our own properties and we have a living trust for each of our estates. And that way we know that if one of us dies or becomes disabled, the other one is taken care of and our properties are sorted out.
Liz W: Very good. That's good to hear.
Sean: I think it's also worth noting that there are a lot of very technical ins and outs of this and it can vary by state what laws will affect who gets what property if something does happen. So, again, as we like to say here, it's worth consulting with a pro, which would be a real estate attorney, to help you figure out what would be best for you and your partner in this situation.
Holden: One thing I would caution is to leave parents out of this, if at all possible. I talked to a loan officer and he said that when parents are involved in these discussions things tend to get really dramatic pretty quickly. It's really none of the parent's business. If you can keep the parents out of the money, like not borrow from them or take gifts from them to make the down payment, that's ideal. And not involving them in discussions of ownership, because they're not the co-owners, so leave them out of it. Just leave them. Leave that discussion just up to the two of you and your advisors.
Liz W: That's a good point, Holden. Have you heard about a lot of drama happening when parents get involved?
Holden: I do hear about drama happening, especially when the couple isn't married and the parents disapprove of their kid's partner. This is a way to start just wielding that cudgel of, "Well, I think that you guys shouldn't be together and so you definitely shouldn't buy property together." And you know what? You know better than your parents do.
Liz W: We hope. Well, thank you, Holden. As usual, you've given us a ton of information.
Holden: You're welcome and see ya.
Sean: All right, well, with that, I think we can get onto our takeaway tips and I'll kick us off here. First up, compare your loan options. FHA and VA loans, if you're eligible, might offer an equitable deal if you prefer both borrowers on the mortgage.
Liz W: Next, know how to structure the paperwork. It's possible for the mortgage to be in one name and the title to be in two names.
Sean: And lastly, cover your bases financially and then personally. Have a deep conversation with your partner about how to structure the title and get personalized advice from a real estate attorney or maybe a title agent.
Liz W: And that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected]. Also, visit nerdwallet.com/podcast for more information on this episode, and remember to subscribe, rate and review us wherever you're getting this podcast.
Sean: And here is our brief disclaimer thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented financial writers, but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstance.
Liz W: And with that said, until next time, turn to the Nerds.