Everything you need to consider before purchasing that first home as a couple.
Photo by Adele Portait Photogarphy
Buying your first home together can be an exciting opportunity to make your dreams come true — or a stress-filled journey into the unknown. Will you come out on the other side as happy homeowners, or will the search leave you miserable and alone?
Here are some tips to help keep your relationship on steady ground while avoiding costly mistakes.
1. Make sure you’re on the same page
Chances are that you and your partner have different ideas about the home you should buy. One of you might want a home in the suburbs, while the other is picturing a swank urban retreat. (Trulia even created a quiz on the topic.)
You might be up for the challenge of a fixer-upper, but you’re wary of your partner’s DIY skills. You want a large yard for the dog, but he dreads the upkeep. The list of reasons that you can butt heads is seemingly endless.
There are many decisions to make regarding location, style, and condition, so before you begin your search, have a frank discussion about what each of you wants. Make a list of your “must haves” and “nice to haves” so that you can refer back to it when it’s time to evaluate homes during your search. It’s important to understand where you’ll both be willing to compromise.
2. Get your credit ducks in a row
Start by purchasing both of your credit reports and checking for any inaccuracies or negative items.
However, before you start paying off that five-year-old collection account, check with a mortgage professional about what you should and should not pay off or challenge. Often, any activity on an account, even if you are paying off a debt, may have a negative impact on your credit score.
Sharing credit information is often a sensitive matter for couples. Lenders place more weight on the lower-scoring partner, so now is the time to work together to improve your joint credit profile.
3. Take a hard look into your wallet
Prequalification for your mortgage is a must — if you can swing it, it’s worth doing so. Most professional agents won’t even show you a property unless they know exactly what you can afford and that you have a prequalification letter to submit with an offer.
Work with a mortgage professional and learn about the various types of loans available and exactly how much you can borrow. It’s also important to discuss with each other how much of your monthly income you’re comfortable allocating to housing costs. Take the time to calculate the “true” cost of your monthly housing payment so that you can be sure to look at homes you can afford.
Remember, there will be no landlord to call if the plumbing backs up or the refrigerator bites the dust. Things happen when you own a home — usually without warning — and you need to be prepared to pay for all items that are not covered by insurance or a home warranty.
4. Find a local real estate agent to trust
Just because your cousin is a part-time real estate agent doesn’t mean he or she is the best choice to represent you as a buyer.
Instead, look for an experienced agent who knows the area you are targeting for your home search; someone with firsthand knowledge of the various neighborhoods, shopping, schools, and other amenities. Ask your friends for referrals and check online references. Don’t hesitate to interview several people to find the real estate professional you feel will be there to answer your questions and patiently guide you through the homebuying process.
Working with an agent whose advice you trust and respect will help keep the peace if negotiations get tough or you encounter unforeseen obstacles.
5. Be prepared for a reality check
Many first-time buyers have an inflated view of what their money should buy. It is unlikely that you will find everything on your wish list. Market price is driven by comparative sales. While you may think a home is worth $300,000, that means nothing if a comparable property just sold for $400,000.
6. Go big or you won’t be going home
Be ready to act. You have to get in the game. Sure, writing an offer is scary, and often first-time buyers want to “think on it” for a few days, or wait to bring their parents or friends to see the property and get a second opinion.
Unfortunately, depending on the competitiveness of the market, your dream home might be under contract by the time you decide to make an offer. One member of a couple frequently is reluctant to act.
Take a deep breath and trust your gut, your partner, and your agent. Under most real estate contracts, you also have a contingency period to investigate the property and pull out of the negotiations if you become dissatisfied or change your mind — without losing your deposit.
7. Get ready for some tough talk from the inspector
Your offer has been accepted; you’ve mentally decorated every room and can’t wait to move in. And then the inspector arrives. You have hired this person to uncover any problems, but you dread the results.
Be reassured that every property has issues, even a newly built home. A thorough inspection is the best thing you can do for your long-term peace of mind.
Talk with your agent about the inspection results, and based on a nonemotional evaluation, you can a) cancel the contract; b) request the seller make certain reasonable repairs or credits based on the price you have offered; or c) have a good list of minor things that should probably be attended to in the next year or so.
Never assume that because everything was remodeled there are no problems. Always pay for a thorough inspection. It is worth every dollar you spend.
8. Bring your best game
Once you are in escrow, there will be forms (so many forms!) and requests for information from title companies, lenders, and possibly attorneys, depending on where you live. Be timely in providing any requested information or documentation so as not to delay closing. If either of you is unclear about any step along the way, don’t hesitate to ask questions. This is likely the biggest purchase you will ever make, and you owe it to yourselves to make sure you completely understand the transaction.
Ultimately, first-time homebuying harmony is as simple as following these few tips, clearly communicating with each other, and keeping things in perspective.
Oh, and a sense of humor doesn’t hurt.