By Vera Gibbons for Zillow
Some 4 million Americans expect to propose — or be proposed to — over Valentine’s Day, according to the recent American Express Spending & Saving Tracker survey. But how many of them will talk finances before they walk down the aisle? Probably just a handful, even though it’s far more important than the cake, flowers, and invitations!
Save yourself some arguments later by talk about your money now. Here are a few of the questions you need to ask your soon-to-be spouse:
Do you both want children right away? Would one of you prefer to land a new job before you consider having kids? And what about those long-term plans to get a business degree — is that ever going to happen? You need to sit down and have a conversation, discussing your hopes, dreams and aspirations. Then set priorities and come up with a plan to meet your short and long-term goals, one by one — together. This will help ensure a positive outcome!
You really need to know where the other person stands (Secrets are lethal!). If you have assets that need to be protected, consider a pre-nuptial agreement (particularly if this is a second marriage and there are kids, step-kids and others involved — assets often get into the wrong hands!). Saddled with high-interest debt? Come up with a plan to eliminate it — preferably before the marriage.
In just every relationship, there’s a spender and a saver, and trust me: this can wreak havoc! What will happen if one person gambles away the future? Poof, there goes the marriage!
Zillow Mortgage Marketplace analysis of more than 25,000 loan quotes and purchase requests shows that you need a credit score of 720 or higher to get the best interest rates. The analysis also indicates that if you have score of 620 or lower, you’re unlikely to get a single loan quote. So much for buying a house together (Yes — lenders will consider both your histories if you’re applying for joint financing)! Know where you each stand — get a copy of your credit from annualcreditreport.com.
How will you come up with a down payment? Again, this comes down to basic planning and planning starts with a conversation. Once you decide on where you would like to live (take time to research neighborhoods,) and what you want in a house (list your priorities – what you can/cannot live with/without), you then need to figure out what you can afford. This entails taking a hard look at your income and expenses, and ultimately setting up a budget. What can you comfortably afford to pay every month for the next 15, 30 years? Coming up with the down payment is just the start (think: 20 percent).
Some couples like to combine all their finances; others prefer to have a joint account for the household expenses (which you each contribute to proportionately, based on how much you each make), and separate accounts for personal spending. Do what works best for you and your spending/saving habits. Just have a system!
Vera Gibbons is a financial journalist based in New York City and is a contributor to Zillow Blog. Connect with her at http://veragibbons.com/.