The Biggest Questions Couples Should Ask Before Buying a Home
by Karina Parikh
Few things feel more liberating than owning your own place, and buying your first home is a big milestone in any partnership. It can be daunting to think about making the leap from renting to owning, but asking yourselves these important questions will make the big decision a lot easier to make.
What’s a First-Time Homebuyer, and Do We Qualify as one?
The answer isn’t as simple as it seems, and it depends on the type of loan you apply for. Typically, a first-time homebuyer is someone who hasn’t owned a principle residence for at least three years (if your spouse doesn’t meet this criterion, don’t worry, you will both quality as first-time home buyers), a single mother/father who previously shared their first home with a spouse, someone who has lived on property that isn’t compliant with building codes, or someone who has owned a principal residence that isn’t on a permanent foundation.
Why Does This Matter?
There are different types of loans that exist to assist first-time homebuyers. These can help offset the cost of or even cover your down payment, can be used as a grant towards any cost you choose, and can lessen the load of interest costs, just to name a few perks. There are also different programs and grants you can qualify for depending on your occupation or if you’re a veteran. Of course, what you can do with your first-time homebuyer loan is completely dependent on your financial status and where you live, so be sure to read that fine print before looking for your dream home.
Who Qualifies for First-Time Homebuyer Loans?
After you’ve determined that you fit the description for a first-time homebuyer, you must then demonstrate financial need in order to qualify for a first-time homebuyer loan. For instance, FHA-backed mortgages have specific requirements you must meet in order to get a loan. So even if you have a lot of cash stashed away in savings, you may not get the loan you’ve applied for. Don’t think about applying for a first-time homebuyer loan if you plan on renting out your home or are trying to buy one that’s beyond your financial threshold.
That said, a first-time homebuyer loan isn’t the best option for every couple. If you plan on selling your home after just a couple of years, you probably won’t be able to enjoy all of the benefits of your loan. You may even be taxed for those benefits! A loan also limits you because you may not be able to buy your dream home if it is beyond your price restriction, and you may not have many options when it comes to the type of loan you receive. Moreover, if your home’s value goes up, you may actually owe some of that surplus back to your loan program. Don’t let this all deter you—again, it’s all about each couple’s individual situation.
What Do I Need to Find the Right Home?
First, it’s important to have all of your financial information in order before you even think about what your ideal home is like, as you want to be pre-approved for a loan before you make the purchase. That way, you know exactly what you can afford, and you won’t be disappointed if you find out that your dream home is out of your range.
Another thing to consider is how much of your loan you’ll actually need to use towards your house, since you will be paying interest on that amount. You also need to consider the costs of the down payment as well as the closing costs — which can be hefty — before buying a home. Having enough money saved up to pay off those costs will give you more options when choosing the right home.
Hiring a reliable real estate agent can help you navigate through all of the jargon-laden paperwork you may encounter during the home buying process, and he or she can also help identify homes that are perfect for your needs without you having to comb through dozens of listings yourself.
What Should I do After I Find my Dream Home?
It may seem like a tough thing to do, but make sure that you still make it a priority to save up some of your money on the side even while you’re making payments on your home. Establish an emergency fund as early as possible so you can dip into that any time you have a surprise home repair issue.
The housing market is ticklish, so don’t hold your breath if you’re thinking of making your home your greatest investment and selling it for a higher price. You’re better off investing your money.
Buying your first home is an exciting step towards building your future, and you don’t have to feel that you’re figuring it all out by yourselves. Explore your financing options, work with a real estate agent to have a knowledgeable guide throughout the process, and get ready to start your life as a married couple in a place to call your own.