September 19, 2021

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Marriage Or Mortgage? | Bankrate

On the new Netflix show, Marriage or Mortgage, a wedding planner and a real estate agent compete against each other to convince engaged couples to do one of two things: throw a sizable chunk of the change in the direction of getting hitched or buy a house. After you’ve seen the show, it may seem dispassionate and unromantic to choose a practical investment over a picture-perfect wedding, but more and more couples are realizing that there is a compelling argument in favor of the former.

First comes love, then comes the house

Nowadays, getting married isn’t necessarily a stepping stone to buying a home with your significant other. According to a National Association of Realtors (NAR), millennials ages 22-29 made up the largest proportion of unmarried couples buying homes in 2020, at 21 percent. report.

Millennials also don’t form families – usually a home buying catalyst – once earlier generations. A lower percentage of Millennials live with their own family (either a spouse, a child, or both) compared to previous generations Pew Research Center. In 2019, 55 percent of Millennials did, compared to 66 percent of Gen Xers in 2003, 69 percent of Baby Boomers in 1987, and 85 percent of Silent Generation in 1968. Also, only about 30 percent of Millennials lived with a spouse and Child, compared to 40 percent of Gen Xers, 46 percent of baby boomers, and 70 percent of the silent generation.

Marriage or mortgage?

To buy a home, you must have enough cash to pay for a down payment and closing costs. The average closing costs ClosingCorp data shows it was around $ 6,000 in 2020 deposit For a First time buyer from 2019 it was 6 percent, reports NAR. For a $ 340,000 home – roughly today’s average price – that’s $ 20,400.

In 2019, the average cost of a wedding was $ 28,000, according to The knot.

If both milestones are similar in terms of cost, which is the better investment? Here’s why buying a home wins instead of paying for a wedding:

You would build up equity. A home is an asset that generally increases in value over time. As you continue to pay back your mortgage, you will accumulate equity that you can use for other purposes. While the experience of a fairytale wedding may be financially enough for some, you will have fewer savings. When you have, and can, enough to pay a deposit make the monthly mortgage paymentIt makes more sense to invest in the financial future of your and your future spouse.

You wouldn’t rent. While renting has its advantages, you are ultimately helping your landlord, not yourself, get ahead financially.

It could cost less than your wedding. There is no shortage of home financing options, including Low and no down payment mortgages. If your credit is in good shape, and you have savings and stable income, you could get a home for much less than you would spend on a wedding.

Tips on saving for a deposit

  1. Come up with a number. You may not have a precise idea of ​​what type of home you both want to buy or where, but you can create a goal and work towards it. Find out the latest property prices in different locations and property types to get a feel for how much down payment you will need. Remember, the down payment does not include any closing costs, which can range from 3 to 6 percent of the home price.
  2. Know your loan options. Traditional loans may only require a 3 percent or 5 percent down payment, while FHA loans only require 3.5 percent if your credit score is at least 580. If you are eligible, VA and USDA loans have no down payment requirement at all. There are also many First time buyer programs the couple have a mortgage Advance payment assistance.
  3. Find ways to reduce or earn more. Think about how you can earn more – for example on a project at work that gives you a bonus or when you take on one Side hustle and bustle – and cut costs. Start with simple wins such as B. reselecting subscriptions or completely deleting subscriptions, or reducing your monthly grocery bill. If possible, you can also switch from a pair with two cars to a pair with one car for even more savings.

Tips for saving money at your wedding

  1. Keep things small and simple. As with any event, if you don’t have everything to do with the venue, food, and other expenses, and narrowing down the guest list, you can hold your wedding reception for a lot less money.
  2. Wait until next year. If you are planning a high-priced wedding, then like many couples in the past year, you should wait so you have more time to save.
  3. Use other options for saving. An easy way to save is to hitchhike in low season or on a day outside of high season. Go the hair and makeup DIY route and get the help of friends and family, or tap your network. For example, if your aunt has a home catering business, see if she might be willing to offer a discount.

Bottom line

Buying a home and getting married are important milestones and it can be difficult to decide what priorities to set. By buying a home, you are investing in your financial future as a couple, creating the foundation to build equity and wealth over time. What’s more romantic than growing old and making money together?

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