The dependencies that are real
Most of the sequence is preference, but a few constraints are mechanical and worth knowing.
- Mortgage lenders generally want to see about two years of steady income in the same line of work, so a career change or a jump to self-employment shortly before applying makes approval harder.
- New debt taken on in the months before a mortgage application, such as a car loan, raises your debt-to-income ratio and can lower your credit score, so buy the car after the closing.
- Buying and later selling a home costs roughly eight to ten percent of its price in fees and commissions, which means a purchase tends to pay off only if you stay about five years. Settle the city, the job and the partner before the house.
- Debt charging a high rate of interest comes before all of it, since no milestone earns what a credit card costs.
One pile of cash
A wedding, a down payment and a baby all draw on the same savings, however separate they feel. A $30,000 wedding is also a ten percent down payment on a $300,000 home, or most of two years of infant care. Neither choice is wrong. The mistake is making it by default, without ever setting the two side by side.
The classic squeezes
The most common collision is a house and a baby within the same year or two. The mortgage is sized to two full incomes, and then a childcare bill of $1,500 a month arrives or one income shrinks. If children are likely within five years, qualify yourself for the mortgage on a budget that already contains childcare, whatever the lender allows.
Where you have the choice, space major changes about a year apart. Each one brings costs nobody listed, from furniture to legal fees.
If you are not married
Marriage is, among other things, a legal package covering property, inheritance, medical decisions and taxes. Couples who buy a home without it should put in writing who paid what, how the equity divides if they separate, and how the title is held, because the form of ownership decides whether a surviving partner inherits automatically. Unmarried parents need wills and clearly established legal parentage. The rules vary by state, and an hour with a family attorney costs far less than the alternative.
Tip Refill the emergency fund completely before starting the next milestone. The months just after a closing, a wedding or a birth are when the unplanned bills arrive, and they find the savings account at its lowest.
