I often work with couples who are newly, or soon-to-be, engaged. Being a first time homebuyer is overwhelming enough, without bring another set of opinions in to it! But there are some tips and tricks that I recommend to my buyer clients to help smooth the process:
1) Do you have a home (or two) to sell before you can buy?
The merging of households is a long and often stressful process. If you are both renters, or if just one of you owns, it’s likely an easy call–break one or both of the leases and move in together. If you both own it gets a little tricky. Can the two of you comfortably fit in either or both homes? Can one of the homes be kept as an investment property (preferably a cash flow positive one)? And finally, do you need the equity from one (or both) homes before buying the new one? (Read more about the risks of simultaneous buying and selling here.)
2) What is your budget and financial situation?
The merging of finances is often one of the most difficult aspects in a newly committed relationship. Many couples don’t know their partners financial history or credit score until they get to this point in the relationship. Speak to a lender early and get everything out on the table. It may make sense for you to buy together, or it may make sense for just one of you to purchase the property in your name and add the other to the deed later.
Discuss your joint financial goals. How much will you need for the wedding? How do your combined retirement funds look? Buying a new or bigger home may not be the first financial priority for you.
3) What are you each looking for in a home? What are the true must-haves?
This is where the fun begins, and where I am often involved in the process with my clients. I can’t tell you how many times the woman must have one type/size/location of home and the man absolutely hates that type/size/location (or vice versa.) Welcome to your future of compromise. Go visit some open houses together. Speak with an agent about what’s realistic in your price range and, more importantly, to see if there is a new option you hadn’t considered that will make you BOTH happy.
I was a panelist at last year’s Treasury and HHS Financial Relationship Summit’s “Navigating Real Estate Transactions with Couples” and often work with couples buying their first home together.
Learn more: Attend a free first time home buyer class.