7 Mistakes to Help Your First-time Home Buyers Avoid
As a real estate agent, your job is more than just showing people properties. You’re also a guide, especially for first-time home buyers will little market experience. When advising buyers, make sure to help them avoid these seven big mortgage- and financing-related mistakes.
1. They Shouldn’t Change Jobs Suddenly.
A big part of the pre-approval process for a home loan emphasizes stability of income. People who have worked the same job for two years or more are considered a better risk than someone who changes jobs frequently. That means it’s a better bet for a buyer to put off a career change until after the purchase is complete.
2. They Shouldn’t Add Other Major Sources of New Debt.
Even though getting pre-approved feels like a big, important step—and it is—it’s only the beginning of the mortgage process. This is not the time for buyers to make other major purchases, like a new car. It’s also not the time to max out credit cards or change the way monthly credit card payments are made. It’s important to help first-time home buyers understand that getting a home loan is all about proving consistency and stability.
3. Make Sure Their Budget Has Room for Extra Expenses.
Buying a home costs more than just the mortgage payments. In addition to the closing costs, buyers have to contend with unexpected updates and fixes that can range from the inexpensive to the major. Too often young, first-time homeowners budget only enough for their mortgage payments, and are forced to rely on credit cards or other kinds of debt to cover major repairs. Tell your buyers to budget 10-15% of their monthly mortgage payment for a savings account dedicated to household repairs.
4. They Shouldn’t Bet Everything On A Future Higher Income.
Or in other words, buyers–especially first-time home buyers–should always purchase within their means. When they get the huge raise, they can start contemplating other options, but for now strongly encourage your buyers to stick inside of what they can afford.
5. Encourage Your Buyers to Do Minor Repairs in Exchange for a Lower Purchase Price.
For some first-time buyers it can seem like a defeat: buying a home in need of minor repairs. But re-framing the situation can help buyers think creatively about their options. Lay out how much would it cost them to do the repairs themselves—and have complete control over the process—versus how much forcing the seller to make those repairs would raise the purchase price. It might seem counterintuitive to some new buyers, but doing the work themselves can save them money. It’s your job to help them understand all their options.
6. Talk to the Buyers About Future Plans for the Areas They’re Interested In.
If local communities are planning to build or shutter a school or a shopping center, the changes will be reflected in property values and your clients’ experiences. Help your clients understand that they are investing in a neighborhood as much as in a single property.
7. Help Them Think About Their Needs.
It’s easy to be swayed by a good price or a beautiful property, but it the home your buyers have fallen in love with doesn’t meet needs they told you were important, it’s your job to be the voice of caution. That doesn’t mean you’ll talk them out of the idea, but try using their own words to remind them of their original priorities.
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