Do you want to stay in the same neighborhood where you are now? Or do you want to move somewhere closer to work, family, or friends? If one of you prefers the suburbs while the other one loves the city, what compromises do you need to make? What aspects of a neighborhood are most important to both of you? Before starting your house-hunting, make sure that you both agree on the kind of neighborhood that you envision and if they align with your long-term goals and values.
If you’re planning to buy a home with cash, all you need is money. But if you’re planning to apply for a mortgage, then lenders will have to look at your debt-to-income ratio (DTI) and credit scores to see whether you qualify. The DTI ratio is your combined monthly debt payments divided by your combined monthly income. If any or both of you have debts, seek ways to minimize them to improve your credit score, so you can get a better mortgage rate.
By looking at your combined monthly income and recurring expenses, you can begin mapping out how much you’ll be able to afford. As a general rule of thumb, most financial experts agree that your housing payments should not exceed 30 percent of your gross monthly income. And while you’re on the topic, be sure to also consider how much you have on hand for a down payment, and how much you still need to save.
Moreover, it’d be helpful to agree on how you will pay for these expenses as a couple. Will you divide each expense in half, or will you each take responsibility for certain bills? How will you share the expenses if one of you experiences a financial crisis?
Separately listing out what each of you wants in your new home is a fun yet meaningful conversation that’s crucial to have at the beginning of your search. Talk about your priorities, and discuss what is most important to each of you, and the reason behind it. In short, don’t be afraid to get down to the nitty-gritty details. How many bedrooms and bathrooms? Is a living room with a fireplace essential? Do you want a house with a pool? A garden? What do you mean when you say you don’t want a “too modern” house? What’s one thing you’re willing to
compromise? What’s one thing you definitely won’t?
Very rarely will the perfect house appear, especially when factors like your budget, location, and individual preferences are to be considered. But when you can meet in the middle and identify potential deal-breakers, you will come up with something that gives you both a little of what you want. And it will be your guide in finding the loveliest abode that will fit both of your needs.
Having an exit strategy is the most practical way to prepare for all possible eventualities. Before drawing up an agreement, both of you must understand the type of homeownership option to choose from when purchasing a home together. The most common is joint tenancy, where each person holds an equal interest in the property. There’s also what is called tenancy in common, where each person has a distinct, separately transferable interest in the property. Seek help from experts when creating an agreement detailing how you divide your assets just in case your relationship has to be dissolved.
Since purchasing a property is a major financial commitment, having everything in writing for any unexpected occurrence that might disrupt your original plans could save you and your partner a big headache.
Purchasing your first home together could be one of the most amazing experiences you can have as a couple. But since you will be putting six figures into this jointly-owned abode, it sure won’t be an easy feat for both of you. So take the time to sit down with your partner and make sure to have even the most difficult conversations, such as debts and the possibility of a breakup. Communicate and be honest with each other, and see how you can better support each other (instead of clashing each and every time) on your path to homeownership.
