Top Questions To Ask Before Buying Your First Home With Your Partner
Talking about buying your first home with your partner can often turn into a walk down fairytale lane. While it is exciting to debate whether to buy a cozy little house in the suburbs or a modern house in an upscale urban neighborhood, there does come a point when you need to be realistic.
The last thing you need during a home search is to discover that your partner’s credit score means that you might get turned down for a loan or that you have vastly different ideas of where you want to live. Before you get too caught up in dreams about swimming pools and outdoor kitchens, be sure to ask these four questions that make sure you and your partner are on the same page.
How Much Debt Do You Carry?
Ideally, you and your partner have talked some about your separate finances before you start buying a home. If not, you can bet that many things may come to light once you start applying for a loan. Lenders look at multiple factors such as your credit score before they can issue an approval or denial. One of the biggest things that they’ll check is you and your partner’s debt-to-income ratio. Ideally, your debt-to-income ratio should be below 36%, which means that one or both of you might need to pay off a few things to have the best chance at a loan approval.
What Is An Affordable House Budget?
Buying a home is still a better financial option compared to renting since you build equity over time, but you also want to avoid sticker shock. When checking out homes, you’ll want to make sure that you can afford your mortgage payments along with your other expenses. Sit down with your partner to crunch numbers and find out how much you can realistically afford to spend on a home. Keep in mind that a larger down payment can help you avoid having to pay private mortgage insurance, which is an expense that can add up.
How Long Do We Plan to Stay In the Home?
In the real estate lending world, you’ll sometimes hear about what lenders and agents call the breaking even point. This is the point at which you will have lived in the home long enough to regain any money that you initially put into the purchase such as the closing costs. For most people, it takes several years to hit this point. You’ll want to make sure that both you and your partner love the neighborhood and house enough to stay there for several years.
What Happens If We Split Up?
This question is a bit of a downer when you are excited about looking for homes for sale in Long Beach, but it is important to always be looking at every possibility. When you buy a house, creating a formal agreement about how the property is owned and potentially divided up saves headaches down the road. You can choose to either both own equal parts of the property or have one of you hold a higher level of responsibility. Working this out prevents either of you from being surprised by the other partner selling their portion of the house during a breakup.
Buying a house with your partner goes smoother when you both walk into the process with a full understanding of what’s ahead. Once you’ve got these questions out of the way, you can go back to those exciting debates about whether or not you want a beachside bungalow or a house that's located close to your office.