Questions You Need Answered Before Buying A Home With Your Partner

Buying a home is fun. It’s entertaining to imagine all the possibilities. What kind of neighborhood do you want? Do you want a city apartment or suburban home? Do you want a large backyard? However, a house purchase is often the largest financial transaction people are involved in. It’s also complex and will greatly affect their quality of life. Here are some important questions for your partner when buying a home.

What is important to you?

Real estate is also a serious topic and some dry subjects need to be covered between you and your partner. Some of them might not be pleasant.

How much debt do we have?

If you haven’t already, you need to have this discussion with your partner.

Banks look at your debt-to-income (DTI) ratio. The parameter looks at your total debt. This includes not only credit cards but also debt like your student loans and your auto note. It’s divided by your total income. Financial institutions have found this to be an excellent indicator of who repays their debts. They use it to determine if you can afford a mortgage and for what amount.

You’ll often be surprised how much personal debt someone has. Maybe they attended an expensive college long ago. Or their new truck was expensive. Regardless, if you have too much-combined debt, you might need to shelve your plans for buying a house for now.

Don’t be demoralized, you’ll both still achieve your goals. It’ll just take a little longer. You can excel at work and get a raise. Meanwhile, pay some of your debt off.

How much can we afford?

This is a tough question to truthfully answer. Unfortunately, many people would be challenged to afford their dream home.

Go to a bank and see how much of a mortgage they’ll approve you for. This will depend largely on your DTI ratio. Different banks have different parameters, so you can shop around and see what you can get.

Buying your ideal house might also require adjustments to your lifestyle. A big mortgage payment is monthly and will sap the funds for discretionary spending. That big yard you want might mean you can no longer afford fancy new vehicles every few years.

Where do you want to live and for how long?

This is another question that may never have been asked but is very important. It might bring up unspoken issues. Juggling things like careers, education, and families is complicated and hard to balance. For example, moving to a new area might improve your career but that would mean moving away from your partner’s family.

Are you planning on having kids? It’ll determine how big of a house you should get. You’ll also want an area with good schools.

Real estate has tremendous transaction costs. The brokerage cost is typically 6%. You’ll pay half that plus closing costs. Because of this, purchasing real estate only makes sense if you’re going to live there for an extended period.

Buying a home is fun and exciting. However, there are some tough questions you need to ask your partner before you jump in.