Saturday, May 4, 2013

Mortgage, Marriage, Information, and Stress

A couple of posts ago, I linked to an interesting article on recent trends on the timing of buying a house.  It seems that more young couples are buying a house together as a step before getting married.  That article argued that there may be some benefits to mortgage before marriage.  Namely, it forces you to have conversations about finances, children, and other priorities before tying the knot, and that's a good idea.

But, is there another side to advice about mortgage before marriage?  Dave Ramsey (the real estate guru) recommends to avoid house hunting as newlyweds, and he forbids it as nearlyweds:
Also, if you're married, you should be married for at least a year before you buy a home. Don't add the stress of a home purchase to a brand new marriage, and never buy real estate with anyone you're not married to.
Having recently gone house hunting, I can say that Ramsey is right that the process of finding a house with someone is stressful.  It might not be bad advice, but whether you think mortgage before marriage is a good idea depends on your theory of marriage.

  • The The One Theory marriage suggests that the two partners are meant to be together, and that the stress of buying a house is an external stimulus that can threaten the meant-to-be pair's long-term happiness.  Stress on a marriage or a pre-marriage relationship is something to be avoided.
  • An equally viable alternative theory -- The Information Theory -- is that dating, mortgage, and marriage is a process by which we discover information about our partner.  You learn a lot about your partner when you go through something as involved as buying a house, and it is a good idea to learn as much as possible before fully committing to that other person.
Ramsey's advice seems to stem from The One Theory of marriage.  According to Ramsey, you've found The One, so don't mess it up with a bunch of stress at one time.  The Time article seems to stem from the Information Theory.  House hunting is a great way to learn as much as you can about your partner in a short period of time.  If trying to buy a house together breaks you up, maybe you shouldn't be getting married.  Also, depending on the timing of the information reveal, house hunting might help young couples learn that they're not meant to be before they're locked into a long term commitment of any kind (house or marriage).

From an economic standpoint, I'm not sure which theory of marriage is correct.  Regardless, there's no one in the world I'd rather buy a house with than my wife.

2 comments:

  1. I understand where he's coming from, forbidding big purchases for nearlyweds. But the true rule is more like, "don't make a big commitment together if you don't have above threshold X level of trust in each other." Marriage and home purchase are BOTH big commitments.

    He's a real estate guy so he's probably looking at "success rates" of house purchasing decisions conditional on marriage, and seeing that marriage considerably improves success rates. But I imagine it goes the other way too! Buying a house probably predicts higher success rates of marriage too! It's probably even partly causal: you gain info about your partner AND buying a house raises the stakes of exiting the relationship.

    There is a sort of symmetry here, and we care about both things. That said, there are big differences, from a legal perspective, between buying a house and getting married. If you aren't married and jointly own property, it's really easy for one party to get screwed in the aftermath of a falling out.

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    1. Good points, especially the bit about success rates and commitments.

      For brevity, I left the legal differences between jointly owning property as an unmarried couple versus married couple out of my original post. The legal issues are important, and they may partially influence Ramsey's advice. That said, his stated reason is the additional stress, so to my ear, it sounds like marriage advice.

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