One of the dreams of a married couple is that of buying a real estate property. Are you married, and probably thinking about taking your next big financial step?
Everything around you makes you believe you need to buy a house as soon as is possible instead of ‘throwing your money away on rent’. Prices are probably down and the market is more lucrative and promising than it has ever been in the recent past.
Tax credits are available. Everyone from your parents to your friends is urging you to take advantage of the rare opportunity. Not just yet!
Since I agree with the reasons stated above, it does not mean you should purchase a home immediately you get married or as soon as it crosses your mind.
It is going to take far much more than a few tax credits and price reductions to make buying a house possible and financially feasible.
Based on our expert opinion and the reading and research we have done on this topic, we urge you to consider a few things before making this important yet sometimes overwhelming decision.
To know whether or not you are ready to buy your own home, ask yourself the following questions:
Have you set Your Priorities Right?
Unlike a washing machine or a television set, purchasing the wrong home or the right home in the wrong neighborhood is a decision that will haunt a family for years, or even decades come to think of it.
Therefore, the first step in purchasing a home for your family would be to determine what your priorities are. Discuss this as a couple and harmonize your preferences.
Many home buyers consider the design and size of a home. The size could be settled based on the number of children a couple plans to have. Those who expect to raise a big family would settle for a large multi-family home, whereas couples with no kids will go for a smaller home.
Of equal importance is the neighborhood in which the home is located. You would want to stay in a neighborhood ideal for a family.
A secure location that is in close proximity to amenities such as schools, hospitals, and amusement parks is ideal for a couple that is considering raising kids. You may also want to be in a neighborhood with short commutes to your workplace.
Have you considered the number of bedrooms you need for your house? What of the number of bathrooms? It is very important for you to have a list of what is important to you as a couple when it comes to getting a fitting home, and narrow down your search accordingly.
Have You Done Your Research?
Once you have decided on what your preferences on a home are, the next step is to carry out thorough research to discover which homes fit your requirements.
The internet age has made this extremely easy. There are so many listing sites with homes that are on sale and their availability for online viewing.
For some of them, there is a provision for you to key in the type of property you are seeking and all properties that fit your criteria will appear. Easy-peasy!
On these sites, you will get photos of the property, information on the next open house, the amount of yard space, the plinth areas, as well as the asking price for the house.
Additionally, some may have information on crime statistics, unemployment rates, and crime statistics, among others. All these are neighborhood information.
Your research should not end there. Plan a visit to the neighborhood and get first-hand information that is off the record. Nothing beats an informed decision when it comes to buying your own home.
Are You Financially Ready?
I think it is safe to conclude that every married couple knows that they need to consider their finances before deciding to buy a home.
Usually, when couples consider this, they focus on getting to know the minimum credentials needed by a mortgage broker before they are approved for a loan.
Even though this is important, it may keep them focused on blindly qualifying for a loan without considering what amount they qualify for.
It goes without saying that mortgage brokers and real estate agents will approve you for a loan that your financial status wouldn’t allow you to take.
To assess your financial readiness, you can consider the following aspects:
Your credit scores- You can get your credit score for free from websites such as Credit.com. They will give you an idea of where your credit score falls.
You can as well get credit reports from Equifax, TransUnion, and Experian once every year. These, however, do not give you your credit score. Use these tools to know your credit score before going ahead to talk to a lender.
Evaluate your financial situation and financial goals- Whether or not you are considering having a joint bank account, it is very important to understand your financial situation.
Does any of you have an outstanding student loan? How much is it? What is your credit card debt? What is your monthly or annual income? The answers to these questions will impact your decision to purchase a home. They will help you know if you are ready to buy a house.
Before you make this important decision, make sure you meet the following financial goals;
- Have 5-10% of the purchase price to cater for the down payment and closing costs.
- Save up an emergency fund to cover household expenses for about 4-6 months.
- Make sure you have a solid credit score (750 and above) to get the best mortgage rates.
- Take a mortgage that results in a total payment of not more than 30% of your monthly income.
- Become debt-free.
Are You sure this is Where You Want to Spend the Rest of Your Lives?
While most married couples are keen on evaluating their finances, or at worst, are forced to do so by the lender, many are oblivious of the permanence of buying their own house.
This is probably the place where your children will have most of their childhood experiences. You are set to spend almost the rest of your lives if not your entire lives in this neighborhood.
You can’t risk making the wrong decision that has such long-term implications.
You will need much time and lengthy discussions between yourselves to make such considerations as your comfortability with the daily commute required of you too and from that place.
You also need to check if the nature of your careers will sustain you in that neighborhood. Do other couples live within that neighborhood?
Are you a sensible distance from our family members and probably close friends? Answering these questions is vital for such a lifetime decision.
Having said all that, let us see a few things a married couple can do to prepare themselves to acquire their own house.
1. Make a List of Your Housing Needs
Each one of you can come up with your individual list of the things you want in your home.
These could include the number of bedrooms, the size of the kitchen, the design, swimming pool requirements, proximity to workplace, presence of amenities, and the garden, among others.
Each one of you can arrange these “must-haves” in order of priority. Once that is done, compare notes with your partner and work together to create the final list of requirements that appeal to both of you.
Proceed to research and discover the available options. Remember that some level of compromise will have to be considered here by the married couple, and sometimes their children.
2. Save for the Down Payment
If you haven’t started putting aside some money to cater for the down payment, this is the time to start.
For the purchase of your home, you may be required to put aside as much as 20% as down payment depending on the type of mortgage loan you apply for.
Some may require a down payment as low as 3%. The more the down payment, the lesser your loan and monthly installments.
You can make sure you have enough money by transferring a certain amount of money into a savings account. You would achieve great results if this was a concerted effort between both of you.
You need to be disciplined as to never use the savings for any other purpose. You can skip family vacations and save that money for a year maybe.
This can contribute significantly to your down payment. As you save for your down payment, save for closing costs as well. Your lender or agent can help you determine this amount.
3. Get Pre-qualified for a Home Mortgage Loan
When a lender prequalifies you for a home mortgage loan, it means you are a serious buyer.
So it is important to get prequalified before you go scouting for a house to show your real estate agent and potential sellers that you are in a position to get funding should you get a property that suits your needs.
Getting prequalified for a home mortgage loan also helps you know how much loan you can afford. This way, you can avoid straining your budget by looking only for homes within your budget. This saves time as well.
4. Find a Real Estate Agent
Once you have ascertained how much you can spend in the process, and exactly the kind of home you are looking for, find a suitable real estate agent who will work closely with you in the search for your dream home.
A good estate agent will help you assess the costs you are bound to bear with each home you consider. The agent can also help you negotiate for the best price.
You can each ask your friends and family if they have in mind a good agent they have probably worked with in the past.
Before you hire the agent, make sure you interview him/her to ensure they are familiar with the market in question and fit any previously set criteria.
Walking down the aisle is definitely one of the most important decisions you’ll ever make in the course of your lifetime, and so is the commitment to start a family.
With it comes myriad other decisions and undertakings you and your significant other will make throughout your married life. Some may be simple while others may be tough.
One of the not-so-simple decisions you will make is whether to, where and when to buy a home. With regards to when to buy a home, the timeline may differ from couple to couple.
We may not be in a position to determine exactly when you are or will be ready, but with the guidelines discussed in this article, you may just know how to determine your readiness!