Should newlyweds buy a house?
2. Resist the urge to splurge.
If you're looking forward to buying a home within a year, don't
take out loans for that new "now-we're-a-couple" car,
an expensive suite of furniture or trendy weekend toys such as motorcycles.
Aside from the fact that you'll need extra money for your home down payment, mortgage lenders don't like seeing new debt on your credit report.
"You don't have a reliable record of payment for a new car, for instance, so you're in a riskier category financially," says Patrick.
3. Manage your moves.
If one of you is moving to a new job or changing careers, sit tight on the house purchase for three to six months. A stable employment history is important to mortgage lenders.
If you move to a new city after you get married, consider renting for a year before you buy a house, says Patrick.
"It can take a while of actually living in a new place before you know which neighborhoods are the ideal ones for you," he says.
Save, save, save. Even if you need to put contributions to your retirement plan on hold, this is the time to sock away cash. Patrick likes couples to have at least three months of expenses stashed in an emergency fund (in savings or a money-market account) in case one partner loses a job, gets ill, becomes pregnant, etc. You don't want to lose your house when an unexpected financial crisis hits.
It's also smart to save up a hefty down payment. The
more you pay upfront on your house, the smaller your fixed monthly
payments will be. You may also be able to eliminate the cost of
private mortgage insurance, or PMI, by putting down at least 20
percent of the house's cost.
4. Get pre-approved before house-love hits.
Bernard won't show clients any houses until they've had a serious sit-down with a mortgage lender, even if it's not the bank or broker they eventually use.
"It's just awful to see a newly married couple get their heart set on a particular house, only to find out afterward they can't afford it or they're not creditworthy enough for a decent mortgage," she says.
"I insist that they take care of the boring financial details first," says Bernard. "Once they know they're qualified for a home loan and know how much they can afford to spend, they're free to focus on the more emotional side of the transaction -- finding the house they love."
5. Research mortgage deals.
Even if you've had your checking account at Stable Mega Bank since
your college days, you don't necessarily want to get a mortgage
there. Mortgages are very competitive financial products these days
and you might not get a better deal at your current bank just because
you're already a customer.