When it comes to purchasing a house, most people are not alone: 60% of homebuyers in the U.S. are married couples, according to the National Association of Realtors.

Still, the share of unmarried people, from romantic partners to housemates, who are buying a place together has risen to 9%, the real estate association found.

The incentive to buy a residential property grows as mortgage interest rates are low and home prices continue to climb. For some, marriage is put on hold, said Andrea Collins, a home insights expert with Hippo insurance.

Collins compares the $30,000 spent on the average pre-pandemic wedding to half the recommended 20% down payment on a $300,000 dwelling.

In addition to romantic couples, home shoppers are also co-signing a deed with friends and family before they are priced out of the market.

“Waiting just a few more years to buy a home can turn the American dream into a far-off fantasy for most couples,” said Collins, citing that prices for residential properties in the U.S. have skyrocketed 113% over the last decade.

Unmarried couples who buy a house or condo without first tying the knot should agree on whose name will be on the mortgage and who can claim the tax deduction, said Collins.

Partners should also know how they can protect their investment, she added.

A recent study by Hippo found that 20% of respondents purchased a first-time home with a partner since March 2020. Most — 82% — reported making financial sacrifices to afford their new home.

They repaired their credit, reduced their spending, canceled vacations and moved in with someone to save on rent. They also may have relocated and found a new or second job to make more money.

And yet, one in three unmarried co-buyers said they were less prepared for homeownership than they expected to be.

Know before you sign

To be better prepared, Hippo offers five questions unmarried home shoppers should think about before taking the real estate plunge:

Will both names be on the mortgage? When applying for a mortgage, your income, credit score, work history, debt-to-income ratio and other financial factors will be considered to determine how much you’re able to borrow and your interest rate.

If one of your co-borrowers has student loans and other debt or a low credit score, you may want to leave him or her off the mortgage application.

This means there’s no getting around it: You and your partner will need to have a chat about finances before you begin house hunting.

If you both have similar financial backgrounds, applying as co-borrowers can be beneficial as both your incomes will be taken into account. Since a higher income level allows lenders to feel more protected, they’ll often offer a lower interest rate or higher borrowing limit to co-borrowers with steady incomes.

Who will hold the title? The title may not seem like a big deal compared to the mortgage, but given that it dictates how much of the asset everyone owns, it’s important to get right. Co-buyers can choose to have one person own the property outright or it can be split in any way. Often, the percentage of ownership reflects how much money each person is putting into the property.

In Oregon, two or more people can acquire title with or without “right of survivorship,” which means ownership passes to surviving joint owners in the event of a death rather than the heirs of the deceased.

Understanding these terms is key, as it determines how ownership of the home is delegated in the event one of the co-borrowers passes away.

Do we need a property agreement? A property agreement is a legally binding document that dictates the share of finances when it comes to paying the mortgage, utilities and other household expenses.

Most property agreements, especially those with couples who aren’t married, will include information on who will own the property in the event of a breakup. It’s also a good idea to include information on how the profits will be split when it comes time to sell.

A lawyer or mediator can help draft your property agreement. Hiring someone familiar with your situation will be helpful later if you need to make updates to the agreement after a breakup, wedding or the birth of a child.

Will we be living in the property full time? If you and your partner invest in property to lease to tenants or use as a second home, you are considered non-occupants. Non-occupant mortgages will likely require you to have a better credit score, put down a larger down payment and pay a higher interest rate due to the extra risk your lender is taking on.

Who will get the tax deduction? When itemizing deductions on tax forms, you can count the interest you’ve paid on your primary residence’s mortgage against your income, reducing the amount of tax.

Married couples likely file taxes jointly. But when you file separately from your co-buyer, only one of you will receive a 1098 mortgage interest statement from the lender. To also claim the deduction, you must have a legal ownership in the property, be listed on the mortgage and be paying the lending institution.

Hippo experts say it’s a good idea to consider which partner makes the most money, whose name is on the mortgage payments and who shoulders most of the financial burden when making this decision to see who benefits the most from this tax break.

Decide on a home

Once all the legal and financial questions have been answered, you can talk about the size, features and location of your future home. You might want to ask your partner:

• What kind of neighborhood do you want to live in?
• What sort of entertainment options, amenities or businesses do you want nearby?
• Do you want to bring pets or kids into the home?
• Are there any upgrades you would like to add?
• What are your home buying deal breakers?
• How many homes do you want to look at before making an offer?
• How much savings should we have in case of emergencies?
• Will we repair the home ourselves or hire professionals?
• How long do you see us staying in this home before selling?
• How will we split the profits when selling?

Continue the conversation once you’ve settled in. Understand who will be handling home maintenance, chores and lawn care.

 

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Here’s an understatement for you: Buying a home today is not the same as it used to be. In fact, it’s a whole new ballgame.

The COVID-19 pandemic, of course, is largely to blame—throwing the economy for a loop, interrupting supply chains that feed home construction efforts, and forcing many of us to reassess just how much space we truly need. As a result, record numbers of people picked up and moved, sparking a full-boil housing market rife with bidding wars. And now, with interest rates on home loans climbing, things may get even more intense, fueling a sense of “It’s now or never!”

With all of these forces swirling, you need to hit refresh on your mindset and the toolkit you bring to the home-shopping challenge. To help you along, we’re sharing five new rules of homebuying in 2022.

1. Old rule: Find your dream home, then finalize your mortgage paperwork

New rule: Lock in a mortgage before you start your search

In the past, getting pre-approved for a loan was something you could think about after you’d found a house you wanted to buy. Today, though, this approach can stall your momentum straight out of the gate. In today’s fast-paced market, it’s essential to have your ducks in a row and finish your mortgage pre-approval before you make an offer.

“You should be pre-approved by a lender and knowledgeable about your finances before you even begin your home search,” says Beverly Burris, an agent with William Means Real Estate in Charleston, SC. “With houses going under contract as quickly as they are right now, often within days or sometimes hours of going to market, there is no sense in going to see a property before speaking to a lender and learning what you can afford.”

Putting off the pre-approval process could lead to your dream home passing you by, she warns.

“If you wait until after you see a home you like, you won’t have time to speak with a lender or submit your mortgage application before the offer deadline,” she adds.

Many homes today will have offer deadlines that will be impossible to meet if you’re muddling through mortgage paperwork.

Furthermore, having a mortgage pre-approval letter in hand when you make your offer will show sellers you’re serious and can follow through with your purchase. This, in turn, will give you the edge over any competing buyers who haven’t completed this crucial step.

2. Old rule: Shop for homes you can afford

New rule: Shop for homes priced below what you can afford

Traditionally, once you had a pre-approval in hand, that’s the amount that you’d use to set your budget when shopping for homes. After all, a pre-approval tells you (and the seller) how much the mortgage company is willing to give you as a loan.

In today’s market, you may want to structure your budget a little differently.

Lori Ozley, a manager with Birmingham HomeBuyers in Birmingham, AL, advises buyers to look at homes with list prices that fall below the top of their price range.

“These days, houses are selling for more than their list price and, as a buyer, you’re more than likely going to end up in a bidding war,” she explains. “If you look at properties that are under your budget, you’ll have room to submit a competitive offer that goes above the asking price.”

Let’s say your budget is $375,000 and you are touring homes that cost that much. Chances are, the homes that list for $375,000 will sell for a chunk more than that. Your mortgage pre-approval won’t cover the overage, and you will be an unqualified bidder. To avoid falling into this trap, shop below your means so you have room to go up.

 

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You know it’s coming, that sweltering beast we all call summer. The blistering weather brings more than just lethargy and unsightly sweat stains—it can also lead to sky-high electric bills as you crank up the AC. But if your energy expenses are making you feel faint, don’t fear: Just like prepping your home for winter, you can “summarize” your place to save money. Here’s how to stay cool and save money.

Tip No. 1: Avoid running appliances during the day

David Quant, vice president of field operations for American Home Shield, suggests using heat-emitting appliances like dishwashers, washing machines, and dryers at night, when the heat they generate won’t bother you so much.

“Also, check with your utility company to see if there are off-peak times when using appliances can earn you discounts on your electric bill,” he adds.

Tip No. 2: Get your ceiling fan moving in the right direction

Ceiling fans can help keep cool air circulating through your home. Just make sure they’re turning counterclockwise. Most ceiling fans allow you to do this with the flip of a switch; or else you might have to turn the blades.

Tip No. 3: Cool your lights

Green Cleaning Coach Leslie Reichert suggests swapping out your heat-emitting incandescent lightbulbs with cooler compact fluorescent lights.

Tip No. 4: Lower your water heater temperature to 120 degrees

A heater set to 140 degrees or higher can waste anywhere from $36 to $61 annually in standby heat losses and more than $400 in demand losses, according to the Environmental Protection Agency.

Quant agrees lowering that temperature is a smart and painless tweak to make. “We bet you won’t even notice the change in temperature.”

Tip No. 5: Clean up your AC

If you have central air, start by clearing out the dead leaves and trimming back encroaching shrubs around your condenser unit. Shut off the power, hose down the coils, vacuum out the vents, and make sure none of them are blocked. If you use window units, dust your unit inside and out. If it’s over a decade old, replace it with an Energy Star unit.

Tip No. 6: Replace your filters

While the standard recommendation is to replace AC filters every three months, Quant recommends switching them out every month.

“This will ensure that your air conditioner isn’t slowed down by inefficiency. Want to save even more? Invest in a reusable filter.”

Tip No. 7: Seal the cool air in

Whatever your type of air conditioner, make sure any vents or seals are tight. Then inspect the insulation in your basement and/or attic for gaps, especially around ductwork. Also check those windows and doors to see if you need to recaulk or seal anywhere to stem any leaks of cold air.

Tip No. 8: Cover your windows with solar shades or curtains

These help keep the sun from heating up your home. You can buy them at a hardware store. Or, make Tree Hugger’s heat-blocking curtains for $6 using emergency survival blankets. Keep these window treatments closed during the day as much as possible; at the very least, keep them closed during the hours when the sun shines through your windows.

Tip No. 9: Close vents and doors inside, too

Don’t waste energy cooling rooms that don’t get used, Quant says. Instead, close the vents there and keep the doors closed so you can direct more of that cool air in the rooms you do use.

Tip No. 10: Get a smart thermostat

Don’t have a programmable thermostat? Installing one not only lowers your energy bill, it can also reduce wear and tear on your AC system. Reichert recommends programming your thermostat to a slightly warmer temperature during hours when everyone is out of the home.

“Most people don’t program their thermostats because it can be complicated,” says Quant. “With this one simple step, you can save up to $180 each year on your heating bill.”

 

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