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Buying a home together: Financial tips for couples taking the next big step

You made it.

The between you and your partner provided a clear picture of your combined finances. Now, you’ve been preapproved for a mortgage by the financial institution of your choice and know how much you can spend — time to find a home.

Where to begin?

specialists Rulon Washington and Mariana Martinez provided some tips to help the homebuying process go smoothly. Because buying a home together is more than a financial decision, it’s a relationship milestone.

“Don’t underestimate what buying a home together means,” said Martinez, a senior family dynamics consultant for Wells Fargo. “It’s showing a confidence in the strength of your relationship. For some people that’s a little scary, meaning fear and uncertainty are normal. Whatever feelings come up are normal … so let it emerge, work through it, and talk about it without judgment.”

“You have to be willing to give up some of your desires or needs for the benefit of your relationship.” Martinez said.

Shopping for a home

Wells Fargo advises couples to find a real estate agent after securing mortgage preapproval. A real estate agent will represent you, teach you about different neighborhoods and what to look for in a home, and even help you negotiate with the seller if you find a home you like.

With the help of your agent, make your wish list of the key features you want in a home to help narrow your search.

Couples should try to have fun touring homes while making sure they’re looking within their budget and being clear about individual wants and needs. Consider the following suggestions to not let the stress of homebuying cause problems for you and your partner:

• Be clear: Know what is a must and what is negotiable. For one person, having a little bit of green space might be extremely important, whereas for the partner, a double oven powered by gas is something they can’t live without. Make a list of your musts — there should be just a few — and talk about it.
• Think about tomorrow: What works today might not work in 10 years. Try to visualize as best you can changes that could come — children, physical needs, parents moving in — so you can be prepared for the short term and long term.
• Divide the labor: Everything that’s required for homebuying requires a lot of energy and skill. Try to find alignment between each person’s skills and the purchasing task at hand. If neither of you has the skills, then maybe the person with more energy or time to learn should handle that task.
• Be respectful and trusting: There will, of course, need to be some reporting back and forth about what each partner is getting accomplished. But you have to trust that they’re doing what you all agreed to do. When everybody wants to do everything, that often creates confusion and frustration.

The homebuying process

• Find a real estate agent.
• Make your wish list.
• Search for and find a home you like.
• Make an offer. If accepted, you may have to make an earnest money deposit.
• Earnest money is paid toward the purchase of a home, which demonstrates the buyer’s good-faith intent to complete the transaction. It’s typically 1% to 2% of the sale price.
• Complete your loan application.
• Consider a home inspection.
• Confirm if a home appraisal is required.
• Secure homeowners insurance.
• Review the closing disclosure.
• Finalize and sign your closing paperwork.

After closing

• Manage your mortgage account.
• Monitor key loan milestones.
• Review your escrow account, if applicable.
• Track your equity.
• Make your lender your partner.

Finishing the job

Perhaps the most stressful time of the homebuying process is after most of the legwork has been done. That’s when lenders assess whether you meet specific requirements for the loan you’ve requested. The process involves a thorough review of your credit, employment history, income, assets, and property details.

It’s a process that seems simple enough: forward tax forms and bank statements — among other things — and you’re done. But it’s often not that easy.

“It’s a high-anxiety time,” said Rulon Washington of Wells Fargo Home Lending group. “The complex financial transactions have a lot of things tied to them. A seller could need a specific closing date to purchase a new home. You, as a buyer, likely only have 90 days at the same credit score/interest rate. So, it’s not the other things like inspections, lawyers, surveyors, etc., that will make or break a closing. More often than not, it’s documentation and time.”

Washington shared five steps to help your underwriting and closing processes go smoothly:

1. Have a clear understanding of what’s being asked: The underwriters are looking for specific things in each piece of documentation for which they ask. If they want bank statements dating back two years, send them exactly that. Don’t editorialize or make judgments on what you think they mean. Explicitly following their instructions can prevent heartburn later. Sending six pages of a seven-page document, as one example, can be problematic and impact the timing of your close.
2. Create an open line of communication with your financial institution: When you’re going through this process, your life is still going on too. As you’re managing and submitting documentation, you might hesitate to ask a question or assume your financial institution will ask you. It’s OK to check in with them, even if there’s nothing required of you. Build the relationship early, so you don’t have to later.
3. Understand timing and deadlines: You know what your closing date is supposed to be. Work backward from that date to make sure you understand the timing of everything. Also, be cognizant of other people’s work schedules. For example, understand that sending documentation on a Friday afternoon versus a Thursday morning likely means an additional three days of processing because of the weekend.
4. Understand your financial obligation: Know that you’re going to be financially responsible for this amount, each month, for the next 360 months. When you get preapproved, it’s usually for a mortgage only. Sometimes, property taxes, homeowners’ insurance — which you’ll want to shop around for the right policy — and private mortgage insurance are not included in the mortgage amount. So, even though your mortgage might be $1,000, your monthly payment will be more than that and can fluctuate throughout the years. So, make sure once all the smoke clears, you know the exact number you’re going to pay for everything, each month.
5. Don’t go on autopilot: Once people close and move into their home, the mortgage is kind of out of sight, out of mind. Make sure you’re engaged with your financial institution. A bank won’t truly know you’re in trouble if you’re not communicating with them. Say you have a large, unexpected financial commitment and miss a month of your mortgage. Having a relationship with your bank can be helpful if you experience financial difficulty. And remember, this is a 30-year relationship you’re in — you have to communicate.

You’ve done the challenging work together. With open communication, shared responsibilities, and a little patience, you can finish strong and start this next chapter with confidence.

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