Real Estate Investing

A friend of mine recently bought a home with zero down about a month before her wedding. Conventional thinking is that homeownership is the greatest investment possible and is always a good idea. Another school of thought is that newlyweds should consider renting for the first year to have some time away from the pressures of homeownership and simply adjust to being married. I scratched my head, wondering whether my friend’s decision was a good one - something that was simply none of my business and largely dependent on their individual financial circumstances.

While I pondered my friend’s situation, a tree branch fell through the roof of her new home. Fortunately, homeowner’s insurance covered the whole thing. Had she been a renter, she could have waited in vain for weeks for the landlord (who may or may not have purchased homeowner’s insurance) to arrange a solution for the problem. Instead, as a homeowner, she was able to get an old high school friend, with whom she had a little pull, to make her home a priority and the problem was fixed within days of their return from honeymooning. In this case, it seemed being in charge served her well and she handled it like a pro.

A general rule of thumb is that a couple’s total debt should not be more than 35 percent of their total gross income. Experts recommend paying down as much debt as possible before jumping into homeownership. Not only will less debt make your life less stressful and your finances more manageable, it will help your marriage as well. For the purposes of appearing loan-worthy to lenders, make sure employment has been stable for at least a year and there have been no significant loans in the recent past. You should also understand enough about your town to pick the best area for you to live.

Saving for a higher downpayment is great for securing a lower interest rate and building instant home equity. Renting for a time may facilitate that goal. One half of the couple may also need a little time to clean up the good old credit report. Home buying is an individual decision, but inevitably a stressful process that can heap unneeded stress onto the already stressful situation of combining households with a new spouse.