With Valentine’s Day drawing near, and the spring real estate market just around the corner, it’s the time of year when Lovebirds think about nesting. Buying a home together should be an easy process, as long as you enter into it with some idea of what will happen and the unfamiliar terminology you will encounter along the way. So, here’s a quick guide to make the experience easier.
Whenever two people will appear on a title or deed, they most likely will need to qualify separately to be on the mortgage, or Deed of Trust. It’s important that the Lovebirds have a private, honest talk about their debt, credit score, income, and overall creditworthiness. If the nesting instinct is strong, having a loan officer in the room is not a bad idea, so that credit and loan questions can be answered immediately. This will help the couple decide if home ownership is currently workable, or if there is some credit repair or debt reduction necessary to qualify for the best interest rates.
If the situation looks good, the loan officer will provide a price range the couple can afford, and you can bring that figure to your realtor to set up your home search.
Choosing a good real estate agent will be key. Make sure they are approachable, know what they are doing, and don’t just look at you as a one-time transaction. The best customer service and satisfaction comes from an agent who looks past their one-time compensation. Be sure to hire them as your buyer agent, so that they are legally obligated to do so, and look after your best interests.
Important questions will arise about how the couple will take title to the property. The explanation below is not given as legal advice, but simply to help you recognize the terms (which you probably have not seen before) and go into this discussion with some prior knowledge.
In Maryland, when more than one person is buying a single property, they can take title in one of three ways:
1) Tenants in Common – Despite the words “in common,” this form of ownership really divides the owners’ interest into separate “shares.” Ownership can be 50/50, or any other proportion they agree upon. There is usually no way one owner can take over any other share, except for buying it.
2) Joint Tenancy – This is the most common form of ownership for non-married individuals who share actual residency in the property. Maryland, however, will assume that non-married individuals are Tenants in Common unless the deed specifically states that the parties are holding the property as “joint tenants with rights of survivorship.” This means the property is not divided into shares, but is co-owned by the parties, and one will inherit the other’s interest in the property if the other should die.
3) Tenants by the Entireties – Think of this as Joint Tenancy for married couples. It is assumed in Maryland that married couples are holding the property in this form, even it if it is not specified in the deed. This also offers extra debt protection for each spouse against the creditors of the other. If the couple divorces, the ownership interest is converted to Tenants in Common.
The lawyer who writes up your deed – usually through the services of a title company – will certainly be able to answer questions and clarify any issues that the Lovebirds will have on an individual basis.
So let Cupid’s arrows fly, and enjoy your Valentine’s Day with your special someone. When the time comes to nest together, you’re prepared!