While it's a cliche that communication is key among successful couples, it couldn’t be any truer and more crucial if you’re planning to buy a house together. Not only are you going to make one of the most fulfilling purchases of your life—but you’re also going to experience the joy and hardships of homeownership with the person you love.
So before you start poring through real estate listings and begin your next chapter together, you and your significant other need to have an open and honest conversation in which you ask yourselves and each other these key questions.
1. Where Do We Want to Live?
The first step in deciding you want to buy a home is knowing where you want to live. Because unlike renting, becoming a homeowner involves a much bigger commitment, which could cement you to a particular place for a couple of years or so. And, if you're moving with a partner, you need to agree on this matter early on to avoid any contention.
Do you want to stay in the same neighborhood where you are now? Or do you want to move somewhere closer to work, family, or friends? If one of you prefers the suburbs while the other one loves the city, what compromises do you need to make? What aspects of a neighborhood are most important to both of you? Before starting your house-hunting, make sure that you both agree on the kind of neighborhood that you envision and if they align with your long-term goals and values.
2. Do We Have Any Financial Red Flags that We Need to Work Through?
Buying a home together means you'll be entering a joint financial commitment like no other. If you haven’t done so already, now is the time for the both of you to share everything about your finances even before starting your home search. Discuss and be transparent about each other’s current income, assets, savings, credit score, and even debt obligations—may it be student loans, credit card debt, car loans, or other personal debts. This disclosure between you and your partner will guide your home-buying approach since you need to make sure that you can both afford a home purchase.
If you’re planning to buy a home with cash, all you need is money. But if you’re planning to apply for a mortgage, then lenders will have to look at your debt-to-income ratio (DTI) and credit scores to see whether you qualify. The DTI ratio is your combined monthly debt payments divided by your combined monthly income. If any or both of you have debts, seek ways to minimize them to improve your credit score, so you can get a better mortgage rate.
3. What Is Our Budget and How Will We Divide up Expenses?
Whether you're buying solo or with a partner, there are a lot of expenses associated with homeownership that you need to prepare for aside from your monthly mortgage payments. Especially if you’re both a first-time homeowner, things like closing costs, repairs and maintenance, utilities, homeowner’s insurance, property taxes, and other costs can catch you both by surprise.
By looking at your combined monthly income and recurring expenses, you can begin mapping out how much you’ll be able to afford. As a general rule of thumb, most financial experts agree that your housing payments should not exceed 30 percent of your gross monthly income. And while you’re on the topic, be sure to also consider how much you have on hand for a down payment, and how much you still need to save.
Moreover, it’d be helpful to agree on how you will pay for these expenses as a couple. Will you divide each expense in half, or will you each take responsibility for certain bills? How will you share the expenses if one of you experiences a financial crisis?
4. What Are Your Needs and Wants in A Home, and Why?
Since you're two unique individuals in a relationship, naturally, you will have different tastes and preferences when it comes to your dream home. This might be highlighted more when it’s time for you to go house-hunting. You may be a great cook and want a modern and luxurious kitchen, so other features such as a spacious living room or additional bedrooms can be a sacrifice. Meanwhile, your partner would love an extra room for his stuff or a large living room that can fit a sectional couch perfect for those Super Bowl nights.
Separately listing out what each of you wants in your new home is a fun yet meaningful conversation that’s crucial to have at the beginning of your search. Talk about your priorities, and discuss what is most important to each of you, and the reason behind it. In short, don’t be afraid to get down to the nitty-gritty details. How many bedrooms and bathrooms? Is a living room with a fireplace essential? Do you want a house with a pool? A garden? What do you mean when you say you don’t want a “too modern” house? What’s one thing you’re willing to compromise? What’s one thing you definitely won’t?
Very rarely will the perfect house appear, especially when factors like your budget, location, and individual preferences are to be considered. But when you can meet in the middle and identify potential deal-breakers, you will come up with something that gives you both a little of what you want. And it will be your guide in finding the loveliest abode that will fit both of your needs.
5. What Happens if We Break Up?
You're having the most wonderful time in your relationship, so breaking up may be the last thing on your mind. But while it isn’t pleasant to think about, you need to be realistic and consider all possible outcomes. You could split up or get divorced. Or one of you could just decide not to pursue the home. One of you could decide to move out of state or out of the country. When something like this happens, where will that leave both of you standing?
Having an exit strategy is the most practical way to prepare for all possible eventualities. Before drawing up an agreement, both of you must understand the type of homeownership option to choose from when purchasing a home together. The most common is joint tenancy, where each person holds an equal interest in the property. There’s also what is called tenancy in common, where each person has a distinct, separately transferable interest in the property. Seek help from experts when creating an agreement detailing how you divide your assets just in case your relationship has to be dissolved.
Since purchasing a property is a major financial commitment, having everything in writing for any unexpected occurrence that might disrupt your original plans could save you and your partner a big headache.
Bottom Line
Purchasing your first home together could be one of the most amazing experiences you can have as a couple. But since you will be putting six figures into this jointly-owned abode, it sure won't be an easy feat for both of you. So take the time to sit down with your partner and make sure to have even the most difficult conversations, such as debts and the possibility of a breakup. Communicate and be honest with each other, and see how you can better support each other (instead of clashing each and every time) on your path to homeownership.
