When investing on your own, we often find the whole process to be taxing. With a partner who chips in with you every month, it becomes easier. Doing this together with your spouse can ease out most of your tensions. If done in the right manner – and with planning – joint investments can be quite fruitful for both partners in a relationship.
With the money you put away, buying your own property becomes possible. In fact, if the two of you find your own dream house and purchase it, you save even more on the rent. Moreover, your home becomes an asset that lasts a lifetime.
But what goes into coming up with a plan to make all that possible? What are the do’s in such a situation that will help you and your spouse build a home of your dreams? Which are the things you should avoid doing? Below, we look at them both:
Creating Your Next-Five-Year’s Plan
Before you do anything else, you will have to plan what you each want in your dream home. By failing to do that, you set yourself up for failure right from the get-go! A good plan can be crucial to success and act as a map to your dreams.
Now, finding the time when you both are free and off work may be difficult. Even so, create space for it in your busy schedules. It doesn’t have to be right the next day. However, try to do this as early in the home-buying process as you can. Meet up, make a nice evening out of it, and then get down to business. Date nights are okay as long as you can shelve the romance when it’s time to work.
What do you bring to this session? Some wine, open minds, and yourselves. Oh, and a sheet of A3 paper to plan on. Enjoy your date and then tape the paper to the wall. Open the bottle of wine and sip as you draw an x-axis on the sheet. Divide it into five equal units that represent the next five years. The other axis, i.e., y, will track the urgency or importance of each task. Now, begin writing the steps you’ll need to take to get from point, Here, to point, We’re Homeowners!
Follow the plan as well as you can over the designated time period. It is important that you stick to your strategy as a couple. If both of you earn, then divide your plan into ways to end up with long- and short-term savings.
Aside from that, remember…
The Penny You Save is the One You Earn Plus Interest
Most experts in finances will tell you that you need 20% down to buy a home. Don’t worry if you haven’t saved that much. That’s because a down payment isn’t the only way to own a house.
Moreover, the interest rates in the country have been at a record low during the recent years. You may safely assume that they could be poised to steadily rise soon. Why not purchase a home when they are low?
On the flip side, by putting money as down, you do make things easier on your future selves. Decide which way you two want to go – we’d suggest this latter approach. If you concur, then start saving now. Your five-year-map should have included how much you’d need to save. Keep at it!
Work on Your Credit Together
Getting married means a couple can apply to file their tax returns jointly. It makes financial sense too. If only that were the case with credit scores. Even marrying someone with a perfect record won’t affect your not-so-sterling credit score. The same is true for when your partner doesn’t have a high credit score – and you do.
While conjugal connection won’t gain you a joint credit score, it can help ease taking out loans. For instance, don’t apply together if one of you doesn’t have a good enough score for approval. The lender will look at both your ratings and may disqualify you because of it.
Instead, look for a deal where you can borrow using the better half’s credit scores. Keep in mind though that will mean the debt will also be in their name. We’d suggest improving the score and then refinancing the loan in both your names.
Get Pre-Approved Before Going Shopping for a Home
We recommend this to all potential home buyers even before they think about house hunting. But it is doubly true for a couple, like you. Several good things come out of a pre-approval. For one, you both get a clearer picture of the kind of home that is affordable for you. Your mortgage lender will make sure of that. That would mean you won’t go after the houses that aren’t in your budget. Less heartache and financially smart decisions exist down that path.
Secondly, when you step into the market – especially a seller’s market — with a pre-approval report, you do so with an edge. Sellers will notice that you two have your financial ducks in a row. They may even appreciate it!
Ask a Real Estate Agent to Shed Some Light
Finally, take time to celebrate how you and your spouse are such smart cookies. You’ve been saving. You know the kind of house you can afford. You’re also pre-approved for it. Pat each other on the back for doing so well.
However, unless one of you is a real estate agent or has bought property – even a commercial real estate one — before, you’ll need expert help. When it comes to purchasing the home of your dreams, you should hire a buyer’s agent. An experienced individual like that will provide you with sound advice and an unbiased perspective.
Owning a place together can be majorly uplifting as a couple. But so, can be setting goals and achieving them. We hope that as you follow your joint plan, you can bring your marriage to new heights. Happy house hunting!