Buying a home is one of the first major financial decisions a newly married couple will make together. In a study conducted by Coldwell Banker, 35% of married Americans purchased their first home together within two years of getting married, and 88% of couples say that buying their first home together had a positive impact on their perception of being a couple and family!
We agree that buying your first home together is a significant and exciting event that can strengthen your marriage, but it’s important to be prepared and to plan ahead.
It’s important to get your finances in order before you start the home buying process. We hope that you did this to a reasonable extent before you tied the knot! Your combined income and individual credit scores will be used to qualify for a loan and will determine your interest rate. Now would be a great time to pull your credit reports to ensure there are no errors or issues to address.
Create a Realistic and Responsible Budget
There is no hard and fast rule as to how expensive of a home you should buy, but a general rule of thumb is that your mortgage payment should be no more than 35% of your take home pay. Our recommendation is to be more conservative than that. As newlyweds, you will have a lot of important decisions to make together that will impact you financially. Do you have existing debts that you want to pay off? Is there a possibility of pursuing more education? Do you plan to have children, and if so, how will this affect the household income? These issues (and many more!) should be considered when deciding on what you can comfortably afford in a home.
New Build vs. Existing Home
You and your spouse are about to make one of the largest financial purchases of your life. It’s critical to consider all your options in regards to buying a home. One critical option is whether to build your home customized to your needs/desires, or to buy an existing home on the market. There are pros and cons to each decision, but we’ve provided a list of considerations below:
Personalization: When you build a new home, you have many opportunities to customize the home to your needs. Even if you don’t build a completely custom home, you can oftentimes customize the upgrades offered by the builder. Remember that many upgrades come at a price, so make sure the costs of such upgrades are clearly defined in your purchase contract.
Maintenance: New construction homes usually require less maintenance since not only the structure is new, but the appliances, HVAC system, etc. are new as well. This will give you more control of your homeownership bills since you are less likely going to need to budget a significant amount for repairs.
Efficiency: New homes built by reputable home builders are usually more efficient than existing homes. The more efficient a home is, the lower your monthly utility bills will be.
Timing: Moving into an existing home can happen relatively quickly (usually within 45-90 days). Building a new home can take on average 4-5 months. Depending on your circumstances, there’s no best timeframe for moving into your new home. For example, if you need to get into your home quickly, resale may be your best choice. If you’re in no rush to move, then new construction may be ideal.
Location: When buying a new home, you are often limited to lots available in new developments, which may not have the best locations. Commute times can be longer for new homes than for existing homes.
Landscaping: Existing homes often have more mature landscaping and trees that can add to the beauty and value of the exterior of the home. Mature trees can provide shade in the summer or protect against wind in the winter.
Work with a Real Estate Agent
Working with a qualified real estate professional can help streamline the home search and home-buying process for newlyweds. A real estate agent can provide practical advice as well as give you descriptions and overviews of various neighborhoods and their amenities. An agent will help you navigate how to weigh the benefits of various housing options and help you decide how to negotiate for the best price. An agent will also take care of your contractual paperwork.