(Newswire.net — August 16, 2022) — Did you know that 6.1 million housing transactions were completed in 2021? That was up from 5.6 million a year prior. The tally, according to Statista, is expected to dip slightly this year and then rebound in 2023.
Despite the economic uncertainty, people are buying and selling homes. If you and your partner plan to purchase a property this year, there are some questions to ponder beforehand.
From considering financial stability to looking at what each of you wants in a home, there are things you and your partner absolutely must talk about before moving forward with a purchase.
Keep reading to look at four questions couples must ask before buying a property.
Question #1: “How Much Debt Do We Have?”
One of the first things you need to do as a couple is discuss how much debt, if any, you both have. You don’t want there to be any secrets between the two of you. If one or both of you have too much debt, getting the go-ahead for a mortgage might be difficult.
Lenders typically look at applicants’ debt-to-income ratio when considering whether to approve loans. It’s a metric that looks at monthly debt payments divided by combined monthly income.
Your debt-to-income ratio shouldn’t be north of 36%. If a lender believes that you and your partner’s debt situation is excessive, you might have to shoulder a higher interest rate or face rejection altogether. So, you can save yourself some trouble by discussing debt to figure out where you stand as a couple.
Question: #2: “How Much Can We Afford to Spend on a Home?”
You and your partner also need to talk about how much home you can afford to purchase. Your debt-to-income ratio will factor into whether or not you get the mortgage you want. But you and your partner will need to discuss how much you feel comfortable spending on a home.
In other words, just because you qualify for a loan of a certain amount doesn’t mean you have to buy a home worth said amount. You and your partner might want to spend less than the allowable sum. Remember that the monthly mortgage isn’t all you’ll be on the hook for. You’ll also need to spend on maintenance, repairs, utilities, and more. Don’t stretch yourselves too thin.
Question #3: “What Do We Do If We Break Up?”
It’s easy to assume that everything will forever be a bed of roses. But you and your partner need to discuss what will become of your home if the two of you call it quits. It’s best to draft a formal contract before you go house-hunting so that you both know how the asset will be divided if there’s a breakup. It’ll be far easier to decide such matters before you buy a home than after you buy a home.
Question #4: “What Will Happen If Either Party Dies?”
You and your partner might want an arrangement where each party has an equal stake in the home. That way, if one party passes away, the other party gets the diseased party’s 50% interest. It’ll be worth your while to see a lawyer who can help you arrange a tenancy by the entirety plan. It’s a kind of joint ownership that safeguards real estate from creditors of a couple. If either party passes away, the surviving person gets 100% ownership of tenants by entireties assets.
These are the sorts of questions you and your partner need to ask yourselves and discuss before calling a realtor and going out to look at homes. You need to ensure that you and your partner are on the same page as a couple so that you make the right decisions leading up to and after you both sign your names on the dotted line to purchase a home. It’s in both your best interests to ask these questions and answer them honestly.