The number of first-time home owners is shrinking, but don't let that dash your newlywed hopes and dreams of buying a home with the fabled white picket fence someday. Marriage status can put you at an advantage. According to a 2011 study by the National Association of Realtors (NAR), married home buyers comprised 64 percent of all buyers so far this year -- up from 58 percent last year. "The growth in married couples suggests buyers with dual incomes are better positioned to qualify for a mortgage in this tight credit environment," noted NAR's Vice President of Research, Paul Bishop.
Even so, the specter of coughing up enough money for a down payment can be sobering. In a recent New York Times article, "Help With a Down Payment," Vickie Elmer writes that the "biggest barrier to buying a home these days is saving for the down payment."
If you are seriously looking to break into the first-time home owner bracket as a newlywed couple, then it's time to trade in the fantasizing for a dose of pragmatism. The first step is to talk about money. Get it all on the table: How much do you already have saved together? Individually? How much are you willing to give up? Will family be pitching in at all?
"Saving for a first home will be impossible unless it is a priority for both of you," says Jane Honeck, a personal finance expert and author of "The Problem With Money? It's Not About the Money." "You need to talk, really talk about money -- something most of us haven't been trained to do."
Michaelangelo, 30, and Jeanette Kallman, 29, had 'the talk' when an ultrasound indicated two babies were in their near future. After the twins, now 1, were born, the couple moved in with Mrs. Kallman's parents to start saving for a home. They saved money previously spent on rent, eating out, cable and electricity bills; plus, they reaped bonus babysitting. It was a perfect solution to their financial dilemma.
"We wanted to save money at a more rapid pace, and her mom took care of the babies at the same time," Mr. Kallman, a sales representative for Wine Warehouse, said. After eight months, the Kallmans purchased a three bedroom, one and a half bath townhouse in South San Jose for $266,000.
"It's reassuring that the babies have a safe place to call their own," Mr. Kallman reflected. "We can finally decorate their room, which we didn't have an opportunity to do before."
The Kallman's real estate agent, Adriana Trenev Plut of Intero Real Estate Services, specializes in first-time home buying. She admits that many of her couples today are asking their parents for donations. According to the NAR survey, 26 percent of overall buyers are gifted their down payment.
Meaghan and Adam Carreras fall into that statistic. Their four bedroom, two-and a-half bath colonial-style home in University Heights, Ohio, purchased in March 2011, was a generous present from Mr. Carreras' parents. "We couldn't be happier to be homeowners," Mrs. Carreras enthused. "It's been the best decision we've made as newlyweds; a lot of do-it-yourself projects and challenges that make you work together as a couple."
For those saving, the hard work comes much earlier. Teri Gault, CEO of coupon site TheGroceryGame.com, exhorts couples to begin thinking about savings while engaged -- or as soon as possible. She suggests carpooling to scale back on gas money, brown bagging lunches, skipping local morning coffee runs, selling unused tchotchkes on retail sites such as eBay, having creative date nights at home, and forgoing gym memberships. These measures combined, Gault estimates, can save you and your partner up to $450 a week.
Here are some other valuable savings tips from the experts:
The Power of Two. Each person should be saving at least 25 percent of their income per month in order for the couple to afford a home, says Josh Flagg, a real estate professional at Rodeo Realty. He adds, "Mortgage rates are so low right now that it is insane to still be renting."
Write It Down. Gault encourages sharing "open books" of all expenses on a weekly basis. "While engaged, couples should commit to writing down everything they spend money on. She may be surprised at how much he spends on his hockey equipment or video games; he may not have any idea that she absolutely must spend $200 a month on her hair color and cuts." Having the conversation helps to map out an appropriate budget.
Start Transferring Automatically. "The easiest way to save is by setting up an automatic transfer from your paychecks into a savings account," Honeck says. "This out of sight, out of mind process ensures savings will actually happen." Make this off-limits to anything but your home!
Temporarily Divert Retirement Savings. Honeck also suggests suspending retirement savings while you're gathering funds for a down payment. She underscores that the money must go directly into the automatic savings account and then quickly head back into your 401(k) once you're in the home. "Remember this is only a temporary hiatus from retirement saving - not a permanent one," she cautions.
Now - and if you as a couple are ready - it's time to hunker down and reach for that first home. You may have to settle for a different location that offers more for the price, as with some of the couples in my research, or get cozy with your in-laws for a few (eight) months. Whatever the scenario, you are looking into a future filled with endless possibilities, starting with your first home as a sturdy edifice.
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