One of the main goals of many newly married couples is to find a new home to share and start a family. However, because buying a house together is going to be one of the biggest purchases they ever make, it’s important they don’t rush into the homebuying process too quickly. If you and your new spouse are looking to buy a home, then be sure to follow these steps:
Determine what you can afford
One of the biggest mistakes newly married couples make is to overestimate what they can afford. Don’t assume you can simply add what you and your spouse make together, and use that figure to determine your budget. You need to sit down with your spouse in order to identify not only what you make, but also what debts each of you has. You may even not be aware of your spouse’s debt, and vice versa. Go over each other’s credit card debt, student loan debt and other financial obligations to get a better idea of where you stand financially as a couple.It’s also important that you take into account all of the costs associated with owning a home, besides just the monthly mortgage rates. This includes utility costs, property tax, HOA fees, homeowner’s insurance, maintenance fees and possible repair work. First-time homebuyers often neglect to consider these costs, which can lead to serious financial trouble down the road.
Go over both credit reports
In addition to going over one another’s debts and income, you should also obtain a credit report for both you and your spouse. If one of you has an excellent credit score but the other has a poor credit score, that poor credit score could hinder your ability to qualify for a mortgage. Even if you do, you may not qualify for the best terms. Before you even meet with a lender, you should begin working on improving both credit scores. You can do this by checking for errors in the credit reports, paying off debts and paying down credit cards.
Improving your credit scores may require some patience for newly married couples who want to start their lives off in a brand-new home; however, it’s worth waiting until your credit scores are in good shape so that you can qualify for lower interest rates and better terms. You don’t want to be paying thousands of dollars more in interest over the course of 30 years just because you couldn’t wait a little longer to buy a house.
Even if your credit scores are good, you may want to hold off on buying a house until you’ve saved some money. If possible, you should save enough to put a 20 percent down payment on a new home. If you can’t put down 20 percent or more, then you’ll end up having to pay mortgage insurance every month, which is an additional financial burden you won’t want. Additionally, you’ll want to have some money left in savings to pay for financial emergencies that might come up. Moving into a new home without a cent to your name is never a good idea.
Obtain a mortgage pre-approval
If you and your spouse have money in savings, and your credit scores are in good shape, then you’ll want to go get pre-approved for a mortgage before you begin your search for a new home. Not only does a mortgage pre-approval ensure that you will be able to qualify (thereby avoiding wasting your time looking at houses if you don’t), but it will give you a good idea of how much you’ll qualify for, which gives you a budget to work with. Keep in mind that even if you qualify for a large amount, it doesn’t mean that you have to buy a house that costs that much. Your budget can be less than the amount you’ve qualified for.
Put together a wants and needs list
After you’ve obtained a mortgage pre-approval, sit down with your spouse and go over what you want from your new house. Many couples assume that they are on the same page, which leads to a lot of arguments over the course of the house hunt. There’s no point in wasting your time looking at houses if it doesn’t meet all of your needs, after all. Sit down and prioritize your wants and your needs so that you’ll be on the same page when looking at houses and so that it will be easier to make compromises if it comes to that.
Speak with a real estate agent
A real estate agent will find listings based on your wants and needs while keeping your budget in mind. In addition to identifying houses that are for sale in the area you are looking, they can tell you if your list of wants and needs is realistic for the budget you have, help you identify good deals and bad deals, help schedule showings and help with the negotiations. Not only can a real estate agent help you find a home, they can help you save time and money.
Just because you got a mortgage pre-approval from one lender doesn’t mean you have to use them for your actual mortgage. Go to several different lenders once you’ve found a home that you’re interested in and compare the terms that they offer. You can always fall back on the original lender who pre-approved your mortgage, but you may find someone that offers better terms, which could end up saving you thousands of dollars in the long run.Couples who are recently wed are often excited to get on with their new life together. However, when it comes to buying a house, it’s important to take a step back instead of rushing headlong into a home purchase. Take your time and follow these steps to ensure that you end up in a house that meets both your needs at a cost that you can actually afford.