If you and your significant other think you're both ready to purchase a new home you better prepare for an exciting, sometimes stressful, but ultimately rewarding journey. It is crucial to understand the process involved and what you should do to make everything run smoother and easier for the two of you.
Follow these tips for making the move together and tidbits of knowledge to deepen your understanding of how exactly to navigate through the process of buying a house.
Talk about it together
You and your partner must discuss purchasing a home together. Your Tango, a relationship advisement publication, emphasized the importance of ensuring that the two of you are both on the same page and understand what factors are important to each of you. For example, you might really want to invest in a home that is close to public transportation while your spouse is more interested in finding a neighborhood with a quality school district. When equipped with this knowledge you can make decisions together that you're both satisfied with.
Consider making a list separately of what is most and least important to you when looking to buy a house. Compare your lists and find where your interests fall in line and where there are differences. Talk about compromising with one another and make a master list you both agree on.
In addition, it is also important to understand whether you both feel financially prepared to invest in a house. Homebuying is one of the most monumental processes you will experience and talking all the details out ahead of time will help greatly.
When you sit down and talk, one of the first things you will likely want to do is establish your budget. Both you and your husband or wife should feel comfortable paying the agreed amount on a property.
Fun with finances
There are a number of various financial factors to consider when buying a house. You will want to have enough cash to cover a down payment as well as any closing costs. In addition, you will want to know exactly how large of a loan you both feel you can afford. There are many tools available online that allow you to estimate how much you can spend on a house. These tools take into account your annual household income, debt and your down payment to determine your monthly mortgage payment and the total price of the home. It is important to still reach out to a mortgage lender to discuss what you can afford more accurately.
One of the key discussions you might have when talking about buying a home is deciding how much to put for a down payment. Set a goal together and determine a plan to save money. Some extra expenses you can cut and contribute toward your savings account include:
- Buying a cup of coffee everyday
- Getting your nails done
- Eating out
- Buying lunch when you're at work
- Taking taxis or private driving services, like Uber or Lyft, instead of public transportation
- Going out to enjoy a few cocktails
In addition, you may want to consider cutting down on costs by eliminating or consolidating services. For example, if you have an Internet and cable provider, consider just spending money on Internet for awhile and maybe starting an account with a streaming site such as Netflix or Hulu Plus. Get creative with different ways you can save for a larger down payment. By doing so you can afford more and you can build equity faster.
Know your resources
If you feel like you do not have enough money to cover the cost of a down payment on a house, think again. There are many resources specifically for first-time homebuyers that you can take advantage of. Freddie Macand Fannie Mae, two of the largest government-backed lenders, offer first-time prospective homebuyers a 3 percent down payment option.
When providing a lower down payment, a borrower typically must pay for private mortgage insurance until he or she reaches 20 percent equity. Fortunately, the Federal Housing Administration offers insurance for FHA-approved lenders and these insurance rates were recently decreased making acessibility to homeownership easier for credit worthy buyers.
It takes two to take out a home loan
When applying for a home mortgage, realtor.com noted that most lenders consider both spouses' credit score when they are married. Keep this in mind when deciding to purchase a home. If either you or your partner does not currently have a good credit history, consider waiting a few years to improve you or your spouse's credit score. Bankrate noted you can bolster a credit score by
- Paying bills on time
- Paying debt in full
- Use credit responsibly
Remember that the better your credit is, the better interest rate you can secure and the more likely you are to be approved for a home loan.