Homebuying Tips For Newlyweds

Are you newly married and starting to search for your first home? Here are seven tips on homebuying for newlyweds. 

Marriage will be full of firsts for adults, and buying a home is one of the most exciting experiences for a couple. This will be a time of great change and development, both for individuals and for couples.

Marriage is the beginning of a joyous time but also a major life transition. As marriage is a union of two people into a new family, it only makes sense that married adults would want to invest in a new home. 

Before anything, assess both your credit scores and financial statements to ensure you can afford this expense. The down payment is typically the biggest expense; you need to make sure you have enough saved to pay this and the monthly expenses of owning a home. 

Buying your first home can be a daunting endeavor. However, it will always be worth it. Finding the perfect home will take up the bulk of the experience. The following tips will set you and your spouse up for success in finding the perfect home.

Consider these seven tips on homebuying for newlyweds. 

1. Determine Your Financial Readiness 

Setting a budget is the first task for any new homebuyer, no matter whether you are married or not. You should assess your and your partner's income, expenses, debts, and credit scores. Understanding your combined financial health will give you the best idea of what you can afford. 

As a rule, you should never spend more than 25% of your monthly gross income on housing payments. This includes insurance, property taxes, principal, and interest payments. The ideal percentage is 20%; however, 25% should still set you up for success. It is recommended to keep an emergency fund in the case of any hidden expenses. 

Setting a budget as a couple will look different than it would as an individual. A shared budget will make it far easier to find a home that you both can afford. Here are a couple of steps to get you started as you search for your next home as a newlywed:

• Discuss your shared financial and future goals
• Calculate your combined income
• Determine the shared expenses
• Track shared expenses
• Categorize your needs

2. Check Your Credit Scores

A good credit score is extremely important when it comes to applying for a loan and buying a home. There are three different credit reporting agencies that report your FICO score: Experian, TransUnion, and Equifax. All three report on several factors, including:

• Payment History
• Amounts Owed
• Length of Credit History
• Types of Credit
• New Credit

Most lenders will offer better rates if your combined credit score is above 740, although you can obtain a loan with a credit score as low as 580. Keep in mind that getting married doesn't impact your credit scores; however, the debt assumed after can affect both spouses' credit. Any future joint credit applications will look at both spouses' credit scores. 

Married couples will not have a combined credit report, and your spouse's credit history will not impact your credit score. However, both of your scores will be used to determine loan eligibility and interest rates. 

3. Needs vs. Wants

As a newlywed, you'll discover many factors your spouse wants and needs. A great way to find home-buying success is to create a list of must-haves and nice-to-haves. 

It will be hard to find a home that includes everything you want, so you both may have to give up some things you thought you needed. Be open and honest while sorting out your combined needs and wants in a home. 

While searching for a home, you should keep a list of specific home features in mind. At the same time, keep some flexibility on the list; keeping an open mind can expand your search to areas you might not have considered. 

4. Preapproval for a Mortgage 

While the home-buying process will vary state by state, North Carolina is one of the most buyer-friendly states in the country. Preapproval should be your first step when applying for a mortgage. 

Both of you should ensure you have the following documents when obtaining mortgage preapproval:

1. Bank statements from the past several months (including investment accounts)
2. Statements detailing outstanding loans, lines of credit, and rent payments
3. Tax returns from the past two years
4. Recent pay stubs from your current employers
5. Any other financial information, including explanations of large deposits, credit inquiries, marriage licenses, child support, bankruptcies, or diverse settlements. 

Within a couple of days of submitting the application, you will receive a "Good Faith Estimate" (GFE) detailing the estimated closing costs. This is not an exact list, as closing costs will deviate slightly, but it will help you make a more accurate budget. 

After applying, the borrower will receive either a letter detailing you were approved, approved with conditions, suspended, or denied. Don't be discouraged if you are denied for the loan, as there are several ways to increase your credit score for a mortgage. 

5. Do Your Research

It is always recommended to work with a real estate agent when searching for a home. A real estate agent will have more knowledge of the homes in the area, current market conditions, and home prices.

You can always start the home search on your own by researching neighborhoods, property listings, and comparable homes in the area. Many platforms will list important factors like schools, safety, amenities, and proximity to cities. 

While analyzing property listings, you can learn more insight on comparable prices, square footage, home features, and days on the market. You will have a plethora of home types to look at, and if this is your first time buying a home then a real estate agent will be extremely beneficial. 

With the introduction of social media apps in real estate, virtual tours are on the rise. These will give you an in-depth walkthrough of a home. You may be researching many homes in different places and don't have the time to visit each in person. 

Virtual tours save agents and buyers time and money. Buyers won't have to spend their limited time visiting each and every home while also saving money that would have been spent on travel. 

Most real estate companies include pictures of homes online, but virtual tours give buyers a better idea of the layout, key features, and more. It is recommended to visit the home in person as well if it is one of your top choices. 

6. Take Your Time

Finding a home can take anywhere from a few weeks to several months, the average being around 4 to 5 months, including the time to close on a mortgage after an offer is accepted. This means you'll have to be patient and take your time.

Whether you are relocating for a job or simply ready to settle down in a new area, home buying can be a complicated process. Taking your time and learning how to make compromises will be vital. Compromises may involve sacrificing a desirable location for an affordable home or trading date nights for extra money on the down payment. 

As a newlywed these habits can be challenging to start, but finding a good first home will be worth the wait. Keep in mind that this may not be your forever home, which is why it is so important to have an open conversation about your future. This can mean extra rooms for future kids, school districts, home offices, or anything else you want as a couple. 

7. Make an Offer and Negotiate

Making an offer is always a fun and exciting part of the home buying process. However, don't get overly excited till you're handed the keys. Even if you beat the other offers, there is still an inspection and other factors to consider. 

The National Association of Realtors analysis found approximately 2.8 offers for every home listed. Working with a trained professional to help you create and negotiate the offer is always recommended. This is especially important if you are buying during a seller's market, meaning the housing market is highly competitive. 

Typically, the seller will choose an all-cash offer every time. In addition, several terms and conditions are included in a sale. The general guideline for making an appealing offer is to offer between 5 and 10 percent of the home price. Keep in mind that if the deal falls through, you may lose your money. 

According to the National Association of Realtors, sellers sold their homes for 100% of the listing price, and 32% reduced the asking price at least once. Bidding wars may be intimidating, but always worth it if you know this is your dream home. 

FAQs: Homebuying For Newlyweds

Here are some commonly asked questions about buying a home as a newlywed.

How much money should a couple have before buying a house?

A good rule of thumb for a married couple trying to buy a home is that you should save at least your annual salary before buying. Don't pay more on a home than 25% of your yearly income. 

Do married couples get better mortgage rates?

Unfortunately, there is no advantage to being married when it comes to applying for a mortgage. However, having a higher income and improved credit scores will help approve a loan. 

What is the golden rule of mortgage?

The rule of 28 means your monthly mortgage payment should not exceed 28% of your gross monthly income. Many lenders abide by this rule, meaning as a homebuyer, you should too. This will help you afford and keep your future home. 

Who buys the house in a marriage?

As a married couple, the debt is community property, meaning you both are responsible for paying it back. Even if one person bought a home with their own money, the house would be community property, and both partners would be responsible for the debt. 

Who pays rent during a divorce?

Everyone who signs the lease is responsible for paying the rent until the rent is finalized or the lease ends. Whether both tenants are living on the property or not, both are responsible for paying their part. 

Methodology

We used information and data from several different sources, as well as our own data, to determine everything you need to know about homebuying for newlyweds. Most of the data was sourced from the following sources:

• Experian
• The National Association of Realtors (NAR)
• The U.S. News & World Report

Homebuying for Newlyweds - The Bottom Line

If you are considering buying a home with your spouse, you should always meet with a responsible real estate agent to ensure that you both can afford the home. When buying a home together, you're both responsible for paying the mortgage. Meaning if your spouse does not pay the mortgage, you are responsible for their part. 

Before anything, meet with a professional to ensure the home is something you both want. As a newlywed, it is likely this will not be your forever home as your family grows. However, ensure you talk with your spouse about your family plans, as this has a great impact on the home you buy.

As you search for your next home, Raleigh, NC, is one of the fastest growing areas in the country, with many stunning neighborhoods to choose from. Feel free to contact one of our helpful real estate specialists, as they are eager to help you find the perfect home. Buying a home can be overwhelming, but a trusted agent can walk you through the entire process.