Buying Your First Home Together
As a young couple, buying your first home can be an exciting, albeit daunting, adventure. Follow these tips to make the process as smooth as possible.
Planning for the Cost
Before the two of you start looking for a home, you should have an idea of what you can afford. While the amount required for a down payment can vary, conventional mortgages require at least 5 percent down. When it comes to your monthly mortgage payment, the rule of thumb is to allocate about 28 percent of your total income. With that information, you should be able to calculate a ballpark figure of what is affordable.
Remember that the larger the down payment, the more equity you will already have in your home once you move in. Consider ways that you can start saving extra money, like downsizing into a smaller apartment, cutting back on dining out or getting second jobs. Before making any major purchases, think about whether it would be better to put that money toward your down payment instead. You’ll likely find you’re motivated to spend less and save more when you are working toward buying a home.
When it comes to obtaining a mortgage, there will usually be several options available to you. As with making a larger down payment, selecting an adjustable-rate mortgage can help you build equity more quickly, and you may benefit if interest rates decrease in the future. Because rates may also increase over time, some people prefer the stability of a fixed-rate mortgage. Ask a trusted advisor for help in deciding what’s best for you.
Engaging the Right Agent
Once you know what you can afford and you’ve saved for your down payment, it’s time to find a real estate agent. You’ll want to select someone you get along with, who listens to your wants and needs while also giving you honest feedback about whether what you are looking for is within your budget. Especially since you are new to the whole process, you should look for an agent who is knowledgeable and experienced. Many seasoned homebuyers recommend that you work with a buyer’s agent so you are assured that you have someone advocating entirely on your behalf. They will be by your side from the first open house to the final contract you sign, and they can be a big help in demystifying the entire process.
Finding the Ideal Home
The right agent will bring listings to your attention that meet your needs without breaking the bank, but if you’ve never done this before how do you know what you need? As mentioned above, the price of your new home is a key factor, but location is a critical consideration as well. If a house is far away from either of your workplaces, you might end up spending more on transportation. It may be important to you to be nearby other family members, or perhaps having shops and restaurants in the area is your top priority. If you have children, or expect to start a family soon, it’s ideal to be within walking distance of quality schools.
Even if the location is great, always remember that you may not be able to get everything you want in your first home. If you’ve found something within your budget but some other things about the house aren’t perfect, take a close look at where you can wiggle. Know that it’s easy to make simple and affordable tweaks like changing out a light fixture or upgrading older appliances over time to help bring things closer to your ideal. Also keep in mind that first homes are rarely forever homes, and that it’s typical to compromise in order to stay on budget.
Getting your financing in place and finding a good real estate agent will start you on the path to finding a wonderful house to call your own. Try to enjoy the process, as this will be the only first home you ever buy together!