Buying a home with your partner is certainly a big step to take in your relationship. While this is understandably an exciting season in life, you must step back and ask yourself the hard questions before you take this leap. Regardless of if you are looking for homes for sale in St. Cloud, Orlando, Kissimmee, Winter Garden, or Windermere, here are the best questions to discuss with your partner before you make the big decision.
How Much House Can We Afford?
The first question that you need to consider is how much you can actually afford. Your debt-to-income ratio will be the determining factor on what you qualify for when pricing out homes. Be wary about stretching yourself too thin when making this final determination.
How Much Can We Afford to Put Down?
When examining the question of how much you can afford, be sure to also consider how much you have on hand for a down payment. You will enjoy the best mortgage rates and terms if you can put down at least 20% of the purchase price. Putting down 20% will also mean that you do not have to pay the private mortgage insurance (PMI), saving you even more money on the terms of your loan.
How Much Debt Do We Have?
Crucial to figuring out how much house you can afford is knowing your DTI ratio. Most lenders will be leary of a DTI ratio over 36%. It can be difficult to reveal all of the debt that you have taken on to your partner. However, failing to do so at the beginning of the home-buying process can lead to major issues down the road. You do not want these surprises to cause problems when it comes to qualifying for a loan.
Where Do We Want to Live?
Both people in the relationship also need to be in agreement about where they want to live and for how long. Before deciding to make an offer, you need to make sure that both parties agree about what kind of neighborhood they envision, how long they plan on staying in this home, and other crucial elements that will help to guide the decision-making process. Making sure that your long-term goals and values align will go a long way in ensuring that both people are happy with the final decision.
How Will We Handle a Breakup?
Nobody wants to think about what happens if a relationship dissolves. However, you must have this conversation before you make this major commitment. Drawing up a contract detailing how you divide your assets is the best way to handle this delicate situation.
While these questions may lead to some tough discussions, you will be glad that you are both on the same page before you sign on the dotted line.