Rachel Cruze Shares Why Newlyweds Shouldn’t Buy a Home

Finance expert Rachel Cruze said in a Southern Bride article that newlyweds shouldn’t jump into homeownership but also acknowledged that it’s not the advice that some couples want to hear. Many couples probably dream about their future home before tying the knot.

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Read on to find out why Cruze thinks newlyweds shouldn’t buy a home and what she recommends they do instead .

Why Rachel Cruze Says Newlyweds Shouldn’t Buy a Home

If you aren’t a homeowner, you probably plan to be one someday and get out of the rental game. A home can be a good investment, and pursuing that dream with a partner rather than solo can make the goal easier to achieve. So why Cruze’s advice?

Cruze isn’t saying married couples shouldn’t ever buy a home. But for those still in the newlywed phase, she’s simply asking what the rush is.

“It’s okay to rent during the first year to make sure both you and your spouse are exactly where you want to be for a while and you both have a good idea of what you are looking for,” Cruze said, stressing that you should enjoy this phase of your new marriage before complicating it with a mortgage and the maintenance and chores that come with homeownership.

She also said you should take two essential financial steps before you begin the hunt for your dream home.

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Get Out of Debt

You might think that when you buy a home, you’re trading your rent payment for a mortgage payment. But homeownership comes with maintenance costs, and utilities are often higher for a house than an apartment. When you’re free from student loans and credit card debt, there’s a lower chance that these home costs will strain your budget and stress your new marriage.

Paying off your debt will also better position you to weather a financial storm, like if you or your spouse loses a job or experiences some other loss of income. Depending on the housing market, selling your home may be more challenging than getting out of a lease on the off chance that you need a cheaper place to live.

Save for a Down Payment

Cruze advised first-time homebuyers to save at least 10% for a down payment. Ideally, you’d save up for a 20% down payment to avoid private mortgage insurance and have lower monthly mortgage payments. However, saving 20% for a down payment may be challenging for young couples who haven’t been in the workforce for too many years or have been focusing on paying down their student loans.

Before Buying a Home: Additional Steps To Prepare Financially

If the goal of postponing homeownership is to achieve financial stability first, taking a few additional steps can help you prepare your budget for homebuying.

Build an Emergency Fund

Having an emergency fund with at least three to six months’ worth of living expenses benefits everyone, regardless of whether you’re a renter or a homeowner. However, having an emergency fund is more vital for homeowners since there’s an increased chance that they’ll face an unexpected household repair or need to replace an appliance. An adequate emergency fund ensures a leaking roof won’t disrupt financial stability.

Pull Your Credit Reports

Your credit score is pivotal in securing a favorable mortgage rate. A higher credit score can save you a significant amount of money over the life of your mortgage by qualifying you for lower interest rates. Sometimes, a credit report can contain errors that negatively impact your score without you realizing it.

If you or your spouse hasn’t checked your credit report in the past three months, request a credit report. This will allow you to check your report for errors and give you time to correct them before you apply for a mortgage. Then, make sure you’re reducing any outstanding debt and paying your bills on time to improve or maintain your score.

Determine How Much You Can Afford

In an article on Ramsey Solutions, Cruze recommended that your monthly mortgage payment should be no more than 25% of your take-home pay. This 25% includes the mortgage’s principal and interest, homeowners insurance, property taxes, and private mortgage insurance. If you decide to buy in a neighborhood with a homeowners association fee, include that in the 25% too.

When Rachel Cruze Says Newlyweds Should Buy a Home

Cruze said you should give your new marriage about a year, and if you’re debt-free and have your 10% down payment, then “house hunt to your heart’s content.”

Before pursuing homeownership, you should clearly understand your combined financial situation, from debt to expenses to savings. This will help you determine how much you can realistically afford to spend so you can choose a dream home within your financial means. It can also be an excellent first step in managing your finances as a couple.

This article originally appeared on GOBankingRates.com : Rachel Cruze Shares Why Newlyweds Shouldn’t Buy a Home