Purchasing Your First Home as a Married Couple...
As you and your spouse begin to settle down and build your nest, there are
many options available for where to settle including home ownership.
Purchasing your first home together is a big step in creating a shared life
together, and it shouldn’t be rushed. Ensuring a good credit score will aid
in getting the loan you deserve; for approximately a year before applying
for a mortgage, conduct healthy credit habits like paying bills in full and
on time.
Research:
Before you even begin
to look at available homes in the area, it is wise to sit down with one
another and discuss what you are looking for and if it’s even financially
feasible to purchase right now. Discuss several factors that go into
purchasing a home such as:
• Square footage
• Style of Home
• Neighborhoods
• Schools
• Age of Home
• Age of Community
• Location
• Amenities
• How long do you plan on living there?
• Are you intending on growing your family?
• Etc.
Next you need to discuss how much of a home you can actually afford. The
easiest way to get a ballpark figure is to research online through mortgage
and payment calculators. According to Realtor.com, the typically monthly
housing expense should not be greater than 28% of your monthly gross income,
and your combined monthly housing expense and monthly debt expense should
not be greater than 38% of your monthly gross income (Source:www.Realtor.com
)
Links to a Home Affordability and Mortgage calculators are supplied below:
Home Affordability Calculator
Mortgage Calculator
Preapproval:
Now you want to get
preapproved for a mortgage. This merely means you go to a lender and fill
out an application. Hopefully you have been practicing your healthy credit
habits, because now is the time that a great credit score will help you get
a great interest rate. Based on your credit score, income, etc, the lender
will determine whether or not to preapprove you for a loan. Remember if you
want to
shop around for lender rates, each time you fill out an application your
credit history is checked, too many of these can cause your credit score to
drop! Once you have the preapproval letter, you can then actively look for
houses based on your preapproved loan amount.
Finding the Home of
Your Dreams:
With preapproval
letter in hand, you may now open your eyes to all the houses available to
purchase. Talk to friends and family to get referrals for Realtors in the
area and once you have chosen your representative the fun begins. Remember
to stay within your budget when shopping, and use your preapproved amount as
a bargaining tool with sellers. Use the factors discussed in the early
stages of
planning home ownership to give your Realtor so he/she can search for homes
that fit the criteria. Prioritize what is important to you, just in case
all criteria cannot be met in one home.
After looking over a multitude of homes, choosing “THE ONE” is an exciting
step to take, but be careful not to rush the process.
Financing, Inspections
and Offers, Oh My!
Your Realtor will be
very helpful during this process to make things go smoothly for you and your
spouse. They will aid you in making the right offer for your budget and
help you recruit certified inspectors to look over the home for any
underlying problems. It’s better to find a problem with the home now than
after you have already signed your name in blood on the mortgage. Making an
offer too low will often cause the seller to counter-offer, or perhaps
accept a higher offer from another buyer. Be sure to research the housing
market in your area to see what similar homes have sold for in the last 6
months.
Getting an actual loan is a necessary step to take now. Completing a loan
application and supplying relevant documentation to your lender is the
beginning of securing your loan. Fully understand the types of loans, such
as term length, interest rates, down payment and programs like those for
first time homebuyers, before you sign any papers. Once you have made and
had your offer accepted, as well as made the necessary inspections and
obtained a loan, you are in the home
stretch.
Closing and Insurance:
Again your Realtor
will be important in the closing and settlement process, and like almost
everything else, every case is different. Closing will often occur in an
office setting, and you may or may not be at the table with the seller. At
this time all papers have been prepared by the appropriate parties and at
the end you’ll be walking away with keys to your new home.
Investing in insurance for your new asset is just as important as any step.
Various forms of insurance include: homeowners insurance, flood insurance,
title insurance and others. Check all of you options to fully cover you new
purchase.
