8 Things Every Newlywed Should Know About Buying a Home
Congratulations – You’re married! Taking that step down the aisle is certainly one of the biggest decisions you’ll make in your lifetime. And with it comes a myriad of choices and decisions you and your spouse will make throughout your married life – some simple, and others not-quite-so-simple. One of those big decisions you’ll make as a newly married couple is if, when and where to buy a home.
Did you know about one-third of married couples in America purchase their first home together within the first two years of marriage? Nevertheless, buying a home can be a challenging process for newlyweds.
If you’re newly married or engaged, let us take some of the stress off your shoulders. Here’s everything you need to know about home buying.
Assess your financial situation and consider financial goals. Whether or not you plan to have joint bank accounts, if you’re purchasing a home together, it’s important to have a clear understanding of your overall financial situation. What is your student loan balance? How much do you owe on credit cards? What is your take-home pay? How much do you plan to save for retirement? Answers to these questions all impact how much house you can afford — or if now is even the right time to buy. Also worth considering: whether you plan to be a one- or two-income family in the future. For example, if you plan to have a family and for one spouse to stay at home to raise the kids, this can affect your income, which, in turn, affects the size of mortgage loan you want to take on.
Know your credit scores. You can pull a free credit score from websites like CreditKarma.com, which will give you a pretty good idea of where your credit score falls. You may also receive one free copy of your credit report each year from each of the three credit bureaus – Experian, Equifax and TransUnion. Take advantage of these tools and know your credit score before talking to a lender. If you need to clean up your credit report and increase your score before purchasing a home, here are some tips to help.
Get prequalified for a home mortgage loan. Getting prequalified* from a lender means you’re a serious buyer. So before you ever begin house shopping, get prequalified to show your real estate agent and potential sellers that you are able to get necessary financing. Prequalification also helps you know how much you can afford, so you can narrow down your search and won’t waste your time looking at homes outside your budget.
Consider where you want to live in the future. The goals you have for your future can affect the type of home loan that’s right for you. If you’re planning to live and raise your family in your current town and stay in one home for the foreseeable future, a 30-year mortgage may be the most sensible. But if your five-year plan is to relocate to a new city, or upsize to a larger home in the next few years, you may want to consider other loan types, such as an adjustable rate-mortgage with low interest rates in the introductory years.
Make a list of your “must-haves.” Each of you should individually create a list of the things you want in a new home. For example, large kitchen, granite countertops, swimming pool, separate master closets, close to work, family-friendly neighborhood, nearby good schools, etc. Put those items in order of priority and then compare your list with your partner. Now work together to make a joint list of the must-have features you can both agree on. (Keep in mind, some compromise is necessary here!)
Find an agent. Once you know how much you can spend, where you want to live, and what you’re looking for, it’s time to find a real estate agent who will work with you to find your dream home. A good agent will help you consider the costs associated with each home you look at, such as costs for renovations, and help you negotiate the right price. Start by asking family or friends if they have an agent they’d recommend.
Save for a down payment. If you haven’t already started putting money away for a down payment, now’s the time to start. Depending on the type of mortgage loan you apply for, you may be required to put down as much as 20 percent, though some home loans only require three to five percent down. On a $200,000 home, you’re still looking at needing anywhere from $6,000 to $40,000 at closing. Don’t forget to budget for closing costs (your agent and lender can help you determine how much those will be). Before you get too overwhelmed at the thought of saving so much cash, check out these tips to help you save for a down payment in one year or less.
Put your relationship first. Above all else, keep in mind that your relationship with your significant other is more important than any home. Making big financial decisions can put a strain on any relationship, so step into this process with an open mind and be willing to work together and compromise to find the house that best suits your wants and needs as well as your budget.
Are you a newlywed and ready to start the homebuying process? Contact PrimeLending today to speak with a home loan expert in your area about your home loan options.
All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company an Equal Housing Lender.
*A prequalification is not an approval of credit, and does not signify that underwriting requirements have been met.