We know we’re not the first to wish you this, but congratulations! Tying the knot is a major milestone – and a journey that’s full of adventure, twists, turns, and, of course, love. After making this big decision, there is often another right on its heels. Should we be buying a house as a married couple? According to a study by Coldwell Banker, 35% of married Americans buy their first home within two years of saying “I do.” So… do you? Should newlyweds buy a house? Is now the time or should you rent?
Should Newlyweds Buy a House?
There is no one-size-fits-all answer; as with anything in life, it depends on you and your situation. But there are some questions that newlyweds should ask if they are considering taking another big step together:
What’s Our Financial Situation?
You may maintain separate bank accounts and have your own income and goals. However, if you are buying a house together, it is essential to take a deep dive into your financial situation as a couple. Do either of you have student loans? Carry credit card balances? Have auto loans? What is your take-home pay? Are you saving for retirement? If you have children, will one of you stay home?
Get a clear view of your financial picture. This will help you determine if now is the right time to buy, as well as how much house you can realistically afford.
What’s Our Credit Report Look Like?
Married couples do not have a joint credit score, and each of you are entitled to three free credit reports each year. Get them and look for inaccuracies you can clear up and outstanding debts you can pay. This will boost your credit score and help you secure more favorable mortgage terms.
Now, as mentioned, you don’t have a joint credit report/score, but if you have joint accounts, your spouse’s credit very much impacts yours. For example, if you have a credit card together, and your partner forgets to pay it (several times!), it lowers your score. You’re in this together, so make sure to clean up your credit.
What Do We Want in the Future?
Take a look five years down the road. Do you still want to be in the area? Do you think your jobs are relatively stable and secure or that there are ample employment opportunities? Do you want to start a family? Move closer to aging parents? Retire and downsize (newlyweds come in all ages!)? If you plan on putting down roots or at least staying put for five to seven years, a fixed-rate 30-year mortgage makes the most sense financially.
What Are Our Must-Haves?
Think about what you want in a home – and what you feel like you really need. Maybe one or both of you work from home; in this case, office space may be a must-have. Maybe you have children or want to move your parents in; extra bedrooms are a deal-breaker. Maybe you just envision yourself rocking on the porch with your partner or planting a big garden, and a lovely backyard is non-negotiable.
There’s no wrong answer here. Your needs are specific – and important – to you. Remember to look into the future as well. Can you age in place (if you do not plan on moving)? Can you add on or repurpose spaces to accommodate your changing needs?
Do We Need to Get Pre-Approved?
Yes! Getting pre-approved for a mortgage is critical. Do it before you start searching. Why? Well, you don’t want to get your heart set on a house that’s $50,000 above what a lender will give you. It also gives you a clear sense of your budget and how much wiggle room you have when it comes to negotiations. Furthermore, sellers will know that you’re serious and ready to go ahead.
Pre-qualification is different from pre-approval. With pre-qualification, you provide your financial information to prospective lenders and they give you an estimated loan amount. This does not mean you’re good to go, though. It’s an estimate, not a sure thing. Pre-approval, though, involves a hard credit check by the financial institution(s) and a thorough review of your financial information. If all is good, then you can start house hunting.
How Much Do We Need to Save?
You will likely need a 20% down payment. By and large, the days of 5-10% down are behind us. Most lenders require the full 20%. You will also need to cover closing costs, which can be 3-6% of the home’s value. In some cases, sellers will cover a portion of this, but it’s good to be prepared in any event.
Also, save for an emergency fund. The first year of owning a home can be more expensive than you anticipate. The good news is that should newlyweds buy a house and opt for a beautiful home from Synergy Homes, they will have the benefit of knowing that home is new, built to last, and includes the building industry’s most advanced and energy-efficient design and elements.
Contact Synergy Homes to start your search for the perfect house, and get ready to come home.