7 Money Conversations Every Couple Should Have Before Buying a House Together
You’re going to want to discuss a few things before you tackle this relationship milestone.
Every relationship goes through stages: the initial first days of bliss and endless dates, the moments when you realize this really could be something big, when you make it official, when you have your first fight—and make up, when you decide to move in together, and when you choose one another for life. Another biggie? Making a down payment on a house and signing both of your names on a house deed.
Whether you're Team Marriage or not, when two people purchase a home together, it's a commitment—one that requires you to get comfortable talking about money. As financial therapist and licensed professional counselor Kathy Hines, LPC explains, conflict over finances is among the top three reasons couples fight—or ultimately get divorced. Because everyone has a different experience with money and varied emotions tied to it, talking about money feels personal and can make us uneasy, fast.
"Being vulnerable enough to have open and honest communication around money creates financial intimacy. This in turn creates safety within the relationship," Hines says. "Without financial intimacy, other areas of the relationship can suffer and break down."
Before you start the home buying checklist or plan the "We did it!" Instagram photo you'll post of your abode-to-be, make sure you have these important—and maybe difficult—conversations with your partner.
Why do we want to buy a home?
Well, because you’re old enough and it’s about time, right? Not so much. Signing up to pay a mortgage for the next 20 or 30 years is no small agreement, and this is especially true when you will be relying on someone else to contribute, too. April Davis, a dating expert and founder of Luma Matchmaking, urges couples to think critically and deeply about their motivations. Is it because you are both financially ready? Or are you trying to keep up with your friends? Is it better to buy than to rent in your current market? (Right now, it's a seller's market in most of the country.)
Discussing these questions has a twofold benefit, according to Davis, who says not only do you identify your own reasons but you also are able to see a clearer picture of your partner’s perspective. “As long as both sides are being honest with their partners and with themselves, it should be a great conversation to begin with, because the money talks only get trickier,” she says.
What do we want in a home?
For whatever reasons you decided on as a team, the home search is officially on! Before setting up meetings with realtors or diving into your savings accounts, psychologist Yvonne Thomas, PhD recommends taking a step back. Even if you are on the same page about why you want a home, now you need to answer the “what” by identifying your top priorities for your future purchase.
If you’ve ever watched a house hunting television show, you know what to think about: location, size, amenities, age of property, and (of course) price. Be prepared for a heated discussion, since it’s unlikely you and your number one will agree on every little detail. The purpose here is to see if you can find a way to meet in the middle, without losing your temper.
“By discussing these types of details and deal-breakers, the couple can pinpoint whether they are aligned enough or not on what they are ultimately looking for in a house to purchase,” Thomas says. “This is where working together and compromising is very healthy and necessary.”
How much can we afford?
With the wish list in your back pocket, it’s time to crunch the numbers. Based on a number of factors, you and your partner may have different viewpoints on what’s realistic to spend on housing. After all, some people are happy to be house rich vs. house poor, meaning they want to pour more monthly income into a mortgage than anything else. If you’re on the other side of the spectrum and want to spend as little as possible on housing so you have the means to travel and purchase other items, it can be tricky to find the compromise.
“Coming to a decision on how much you both can afford to spend on a house is very crucial in making sure you both stay within your means to avoid future problems that could lead to big consequences financially and relationship-wise,” Davis says.
To do this, both parties should come to the table with your honest-to-goodness financial pictures. This includes how much money you bring in each month respectively, any debt, all bills, and so on. “Knowing how much you can realistically afford paves the way for how you will go about making the purchase because it ties into everything: what location you will settle on, how much down payment you will put towards the house, the features the house will come with, and so much more,” Davis says.
What is our budget—and timeline—to save?
Now that you have a ballpark estimate of your price range, it’s time to team up and decide how you’re going to save for a down payment. There is no magical percentage a couple needs to put down, but it’s usually recommended to come with 20 to 30 percent, so you are paying interest rates for a shorter period of time and you likely won't have to pay the additional cost of mortgage insurance. It is possible to save up enough cash for this investment, especially with two incomes, but it takes work from both people.
According to Thomas, your first goal is determining how you’ll work together to make your house dreams a reality. As you go line-by-line through expenses, speak candidly about what you are willing to give up. Can you get by on just Netflix, and skip Hulu, for a year? Could you go out to dinner once a week, instead of twice? Do you really need to stay at a four-star hotel, or could you get by with a three? These cuts should be balanced between you and your partner, since no one should have to carry the burden alone.
Who will be on the deed and the mortgage?
While most couples will instantly say “both of us!” to this question, Haines suggest thinking about what it means—and if you’re both eligible to sign the mortgage. If your partner owns a company and works for him or herself, they have to be in business for at least a year in most states to be eligible for a mortgage. Or if your partner has a pretty bad credit score, for whatever reason, it could prevent them from getting a loan. These aren’t the happiest of convos to have, but they prepare you for any situation.
If only one name is on the deed, Haines suggests identifying any potential disagreements that could sprout, such as “This is my house, so I do what I want!”
“It can create a power differential and resulting feelings of jealousy or resentment. There may be good reasons to not share equally in both the deed and mortgage, but having open dialogue can help prevent feelings of a power differential,” she says.
How will we split the cost of the home?
During the house search, you discuss expenses such as the down payment, monthly mortgage bills, and any closing costs. Later, once you’ve moved in and you’re making the place your own, there needs to be a game plan for maintenance, unexpected breakdowns, and utility bills. These are all financial obligations, and each of you will be held accountable.
How are you going to split them? Is it fifty-fifty? Or does that not make sense, since you make far more than your partner? Or far less? “There is no right way to split these—the most important thing is to get out all the expectations each other has about it,” Haines says. “Make sure there is clear understanding at the outset, particularly about splitting the upkeep, so there are no surprises. And have ongoing conversations about this to make sure you are both still in alignment and there have been no major changes.”
What happens in the event of a breakup?
Considering you’re ready to take the next step and share home ownership on top of sharing an address, you probably aren’t thinking about breaking up. And hopefully, you will never have to cross that road. But if you do, there needs to be some sort of idea of how you would handle the home you purchased when you were happy and in love. You could even get this in writing with a lawyer, to prevent emotions from being tied up too tightly into financial matters.
Consider how the profit or loss will be split if the house is sold, particularly if the costs of buying and maintaining the property weren’t split fifty-fifty. You might also want to agree that one party will buy the other out and keep the home in the event of a break-up. Whatever the case, the key is to talk about it all sooner, rather than later.
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