Start with an honest financial discussion.
You and your significant other have already made some huge decisions—making a lifelong commitment to each other and embracing your partner’s plans, career goals, and dreams. If these plans include buying your first home, some of your biggest decisions remain. As unromantic as it may sound, finances play a big role in how successful—and how happy—your marriage will be. This is especially true when planning a long-term purchase that impacts your discretionary income for years to come. Here are two important steps:
Agree on how to handle your money.
Do you keep separate accounts or combine funds in a join account? Typically, couples merge their money along with their lives. That means taking shared responsibility for paying bills or developing joint savings goals. For many couples, a joint bank account is the ultimate symbolic gesture of their financial union.
Millennials, however, can be the least likely to share bank accounts compared to older generations. As a newlywed, or someone in a long-term relationship, deciding how to manage your bank accounts is a priority. Weighing the pros and cons of both options can help you make a wise decision.
Decide on your roles.
Usually, the person with the most aptitude, interest, or time for a particular money task becomes responsible for it. Having one person handle most of the money tasks is fine as long as both of you have a strong sense of your overall financial situation. You can achieve that by going over your numbers together monthly or quarterly.
The newlyweds do’s and dont's of home buying.
If you’re thinking about getting married and buying a home in the same year, you’re not crazy. However, you have signed up for some additional stress. Fortunately, Flagstar Bank can help. Here are a few things you’ll need to keep in mind:
Do: be realistic about timing.
The more time leading up to your wedding—and home purchase—the more time you’ll have to save. You should allot up to 15 months to put together a financial plan and commit to it. With the average engagement length being 14.7 months, it’s totally feasible to save up a down payment if you start conserving cash right away.
Once you start house hunting, keep in mind that it may take longer than you think to find the perfect home. You could search anywhere from 30 days to three years. Even the closing takes time—typically 45 to 60 days from an accepted offer until you get the keys.
Do: complete your homework.
Before you get excited looking at listings, you need to be realistic about what you can afford. Couples should sit down months in advance to get on the same page about what they own and what they owe to determine a budget.
You also need to know your credit history and current credit score, since it will directly affect your mortgage interest rate. (You can get an idea of what your monthly payments might be with Flagstar Bank’s mortgage calculator.)
Keep in mind that first-time homebuyers may qualify for a lower down payment through FHA, VA, or other programs. Be sure to ask Flagstar Bank to review all your options.
Don’t: mix your funds.
If you’re still in the wedding planning process, set up one savings account for your house and a second account for the wedding. You don’t want to rob one to pay for the other. Having two different accounts that automatically draw from your checking account can help you keep a “dividing wall”.
If you ask for cash in lieu of wedding gifts to help raise a down payment, know that your lender may require you to provide documentation of where the large deposit is coming from. The waiting period for approval will depend on the type of loan, but for some it may take several months.
Do: get on the same page about your needs.
Ranch or colonial? New construction or old? For many couples, finding that first home can take more time simply because they want very different things. Write down your top priorities in a dream home, then come together and talk about them. Once you’ve agreed on your list of must-haves (and must-not-haves), you’ll be able to zero in on homes that fit the profile.
Don’t: run up your credit cards.
Although 42 percent of couples use credit cards to pay for their weddings, you should think twice before following in their footsteps. A ballooning balance can affect your mortgage and loan application. If you do decide to use credit cards for your wedding, make sure you’ll be able to pay off the bills each month.
Do: prepare to sacrifice.
Small businesses sometimes prefer cash so they don’t have to pay fees for each credit card transaction. We have 56,000+ fee-free ATMs so you can grab cash fast:The national average cost of a wedding is $35,329, and the national average cost to buy a home is $388,200. Though both price tags vary depending on where you live and what you’re looking for, these big lifestage moments are likely to be two of the costliest events in your entire life.
You’re going to have to give up something, whether that means buying a fixer-upper (instead of a move-in ready home) or foregoing a more extravagant honeymoon.
Don’t: forget to build in a buffer.
When it comes to your wedding, it’s always best to be prepared for the unexpected, whether that means having tents in case of rain or hiring a coordinator on the day of the wedding to take care of unpredictable guests.
You’ll want to apply that same thinking to the home buying process. Have your down payment saved and add another three to six months of living expenses based on your new mortgage. Prepare for the worst such as the roof leaking or the furnace going out; it’s Murphy’s Law.
Do: plan ahead to keep things moving.
Flagstar Bank can help you with a checklist of what to expect as you buy your first house. This way, as soon as you have an accepted offer, you’ll know exactly what to do next—like lining up a home inspector and visiting with your mortgage lender again. This will help you get into your new house as quickly as possible.
Visit your local branch to learn more.
Buying your first home can be both exciting and stressful. Flagstar Bank is here to help you every step of the way. Wherever you are in the planning process, reach out to one of our loan advisors. We can offer you expert advice and financial solutions needed to help get you moved into your new surroundings.
