How to Navigate Real Estate as a Newly Married Couple
Just married? Congratulations! If you’re looking at purchasing your first home together, here are a few pitfalls to avoid and some tips to make your experience as stress-free as possible.
Before you start shopping…
Polish up both of your credit scores
How do you improve your credit score? Here are a few tips:
Improve your debt-to-credit ratio: According to many financial experts, the ideal credit usage on all your accounts is 10% or less if you want a truly excellent credit score. However, for many, that low number isn’t practical. If that’s you, focus on keeping your credit usage below 30% of your total available credit, and your credit score will improve.
Make on-time payments: The most impactful thing you can do to improve your credit score is to make on-time payments. A history of on-time payments shows creditors that you are reliable and low-risk. This can take time to build, but it’s worth it, and it will improve your score by a lot.
Don’t take out new lines of credit: Another factor that impacts your credit score is the overall age of your accounts. When you take out a new line of credit, the overall age is reduced, which can make your score drop. Additionally, when you take out a new loan or get a new credit card, lenders usually perform what’s called a hard credit check, which can also negatively impact your score.
Combine those savings
For a conventional mortgage, you’ll need a 20% downpayment plus an additional 3 to 5% for closing costs. Now is the time to assess your savings and combine what you have with your new partner. That way, you can easily determine how much you still need and what you’re going to do to get there.
If you and your spouse are first-time homebuyers, now is also the time to start talking to lenders and looking into first-time buyer programs. You can find many of these at the state, county, and local levels—and by asking your real estate agent.
If you already own real estate, list it.
Planning to use the equity from a home you currently own to fund the purchase of your new one? As soon as you’re prepared to buy, list your home. The current low-inventory market favors sellers, but real estate timelines can be unpredictable. It’s a good idea to give yourself more time so that your transition can be as smooth as possible.
If you’re worried about selling before you’ve found a new home to buy, you can use what’s called a home sale contingency. A home sale contingency is a clause you include in your offer that specifies that your purchase of the new home is contingent upon the sale of your old one. If your old home doesn’t sell in time, you can back out of the transaction. While these contingencies are helpful, the market is competitive for buyers right now, so including one could harm your chances of landing the home you want.
Don’t want to sell your property? You can keep it and use it as an investment property or a second home—but you’ll need to make sure you have the funds to purchase your new home without the sale.
While you house hunt…
Consider both of your needs
Buying a home as a married couple is a long-term investment for a long-term relationship. It affects your finances and the wealth you’ll build together—but remember, this is also the place you're both going to live. You want it to be yours, and that includes both of you.
When you make your must-have list, try to do it together so you can agree on what’s really a must-have, what’s a nice-to-have, and what’s a must-not-have in your new property. One way to do this is to make separate lists focused only on your individual needs, and then bring them together. Each person can specify what their absolute must-haves are, and together you can prioritize the rest.
Compromise if there’s conflict
If you have trouble agreeing about a home feature or a property on your house hunting journey, try to compromise. Buying a new home is exciting, especially as a married couple, but it can also be stressful. It’s important to prioritize your relationship together over any one detail. Try to be realistic, and hear your partner out when they have an opinion that conflicts with yours.
If you can’t agree, try compromising on something else. For example, if your spouse really likes one house better than the other, but it’s not your top choice because it doesn’t have one of your must-haves, ask your spouse to consider adding your must-have to the property after you’ve bought it. There’s usually a way forward if both partners are willing to compromise.
Shop with the future in mind
The common wisdom is that you should wait at least two years before selling a home to avoid capital gains taxes—but longer is actually better. Generally speaking, real estate values rise in the long term. The longer you live in your home, as long as you’re maintaining it, the more its value will grow. Additionally, As you make payments on your mortgage, the amount you owe will go down. This results in equity.
Equity is the difference in the value of your home and the amount you owe on the mortgage—and the bigger the difference, the better. Why? Because it’s the amount you’ll get out of your sale when you do eventually sell.
Since you’ll want to stay in your home for the next few years to build equity, it’s important to house hunt with any big life changes you’re planning in mind. Are you considering having kids or getting pets? Is it possible that other family members or friends will need to stay with you? Do you have hobbies or are you planning a career change that will require specialized spaces at home? If so, make sure you plan for them now.
After you move in…
Make the place yours
Painting, decorating, and furnishing a brand new home with your partner can be fun—and it can be a great bonding experience. Now is the time to build a beautiful space that you’ll enjoy together for years to come. How you do it is up to you. Consider letting each person plan and decorate individual spaces, or make mutual decisions the whole way through.
Honor each other’s spaces
It is important that each person in a home has their own space. Even if you do most of the planning and decorating together, let each partner have their own spot to call theirs. This can be as large as an entire room like an office or den or as small as a reading nook or gaming corner. Try to make sure that the spaces are equal and that each person gets to do what they want with it—even if it’s not to each other’s specific taste.
Think about value-boosting upgrades
When you’ve been living in your home for a while and you have the funds, think about making upgrades that will boost its value. This can be anything from installing smart home technology to upgrading the finishes. Think about indoor features like flooring, countertops, fireplaces, and more, and don’t forget outdoor features like landscaping, a porch or patio, fencing, and your siding. Just keep it within budget, and make sure that you and your partner are on the same page.