For many people, buying their first house is a joint venture with their spouse shortly before or after their wedding day. It’s an exciting time and most people are eager to start their new lives together.
Charging headfirst into home ownership as a recently married couple, however, usually comes with a few extra challenges. You’ll be juggling two people’s credit history and all the paperwork multiplies. If marriage and a new dream home are on the horizon, it’s important to ask the right mortgage questions before you start planning. Whether you're currently planning your wedding or you've already exchanged your I do's, check out these helpful tips for house-hunting newlyweds.
1. Polish Your Credit
Most credit sites will tell you that the minimum credit score to successfully get a loan for a house is actually fairly low, in the high 500’s or low 600’s. But if you want a better deal or a nicer house, you’ll need a credit score much higher than that to qualify for the best loans. Start working on your credit right away, because improving your score could take months. Improving your credit isn’t terribly complicated, but it can be a slow process.
In a nutshell, you’ll want to make payments on time, lower your debt utilization ratio, and double-check your credit report to ensure there are no mistakes on it.
2. Pay off any outstanding debt
Getting rid of old debt won’t just improve your credit score, it will also make you more desirable as a loan client. Lenders are apprehensive about giving out loans to people who are already deep in debt because it seems less likely that they’ll get their money back.
When you apply for a mortgage, the lender will look at your total debt compared to your income and if the percentage is too high, you won’t qualify. Lenders take into account all kinds of debt: student loans, personal loans, car loans, and anything else that you owe money on. The less debt you have, the better mortgage you will qualify for.
3. Save up a nest egg
Most people come in wildly under budget when they buy their first home because they’re not considering all the expenses. Down payments and closing costs are obvious enough, but there is a myriad of other expenses that come out to play when you buy your first house.
Most people are going to spend a good $5,000 to $10,000 on their new home in the first year. So you’ll want to have at least that much set aside so you don’t have to go into debt further than you need to.
4. Budget effectively
It’s one thing to save money, it’s another to do so in an effective manner. Saving the money for a new house is going to take some time under the best of circumstances. Don’t let it drag on even longer by not budgeting efficiently.
Budgeting can mean giving up some things you’re used to indulging in, but it’s better to budget hard for a shorter period of time than to slack and have it take forever.
Save as much money as you can each month by setting a monthly goal, separating your savings account from checking, logging your progress, and identifying and/or cutting unnecessary expenses.
5. Find the right agent
Real estate agents are like new boots. If they’re a bad fit, you’re going to end up in a lot of pain. Your real estate agent needs to be on board with what you want and they need to be punctual.
If weeks are passing without your agent following up with you and answering your questions, then you need to find a new one. Don’t be shy about shopping around for a better agent. This is the person who is going to make your dream house a reality, so be as picky as you need to be.
You also want to make sure you’re getting the best value in an agent. Wouldn’t you be mad if you found out you could have gotten a rebate on those new boots, but no one told you? In 40 out of 50 states, an agent can offer what is called a buyer commission rebate. This allows them to pass on a portion of their commission (up to a whopping 1% of the purchase price) to you. On a $150,000 home, that’s $1,500 in your pocket at closing! That could really come in handy when you’re budgeting for closing costs or upgrading your new place. Most agents won’t advertise this, so just ask! If they want your business, they’ll be happy to negotiate in a rebate for you if they can.
6. Know what you’re looking for
House hunting is overwhelming under the best of circumstances. Don’t let it become even more intimidating by rushing in blind. Sit down and make a list of what you’re looking for in a house.
Separate your list into “must-haves” and “desires.” (Kinda like your list of wedding priorities!) Then you can use this list to compare houses against each other and determine which neighborhoods to look in. Share your list with your real estate agent, as well, so they can better direct you on your search.
7. Don’t rush
A lot of the time there’s a sense of urgency surrounding couples during their wedding year. You may feel pressured to have a house lined up immediately before or after the wedding, but don’t stress yourself.
Picking the wrong house is not a mistake easily remedied. Take your time and make sure you’re getting the house that you want in the neighborhood you want to live in. And don’t let anyone tell you that you “have” to have a home by a certain date. You’ll know when you’ve found the right place, so just be patient and persistent.
We hope these tips help prepare you for your newlywed house hunting!