For most Americans, buying a home is the largest investment they will make in their lifetime. Although buying a home with your significant other can be an exciting time, you must also be prepared for the various pitfalls that may occur throughout the process. While you and your partner may have shared many details with each other, some items such as debt may not be uncovered until later. As with any relationship, communication is a key to success. Below are a few questions that must be covered with your significant other prior to a home purchase.
- 1. How much debt do you have? When applying for a home loan, mortgage lenders will look at your debt-to-income ratio (DTI). The DTI ratio is your combined monthly debt payments (from obligations like credit cards, student loans, car loans, installment loans, and personal debts), divided by your combined monthly income. As a general rule, to qualify for a mortgage your DTI ratio cannot exceed 36%. Needless to say, one person’s debt in this scenario can wreak havoc on the overall DTI.
- 2. How much house can we afford? While your DTI can tell you much you can qualify for, only you and your partner can decide how much you feel comfortable spending on a home. General home maintenance and other potential upcoming expenses must also be accounted for to ensure that you are not spreading yourselves too thin.
- 3. Where do you want to live? What is your timeline? Buying a home makes financial sense only if you’re going to stay in it long enough to recoup your purchasing costs. Some key factors in these decisions are whether or not you may be relocating soon for a job. If you are planning on starting a family, the school zones may also be a huge factor in your decision making.
Buying a house is a huge commitment. It is critical that you consider all factors when making this important decision. Oftentimes, we see young couples move to an area only to realize later that they had wished the school zones were better for their young children. A best practice is to work with a local and knowledgeable real estate agent to help guide this decision making. Although there are many resources online to assist in your property search, only an experienced real estate agent can provide the best knowledge in a certain market. If you are ready to take the next step towards purchasing a home, contact Live South Florida Realty, Inc. today!