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It’s the quintessential American dream: A modest, yet comfortable home nestled in the suburbs, surrounded by a white picket fence with two kids and a dog playing in the yard.
Your buyers’ version of that dream might look a little different — maybe they’re more of a cat person or they’d prefer to be in the heart of the city — but the idea of having a safe place to call their own and start a family sounds nice and makes for a great sell.
If you’re a broker or agent working with a buyer who’s in the market for a new house — whether it’s a starter home or their forever home — and has long-term plans to start a family, here are a few tips you can share to ensure that they make smart decisions.
1. Be realistic about your budget
Buyers should never spend beyond their budget. Although the might seem obvious, many buyers lose sight of that when house hunting because they’re often drawn in by the bells and whistles that can quickly drive up the price of a property.
Before they set foot into their first open house, encourage your buyer to figure out their housing expense ratio, which measures their housing expenses against their pre-tax income and indicates whether a lender would approve their loan.
2. Start saving for a down payment as soon as possible
The more cash a buyer has up front, the more likely the offer they make on a home will be accepted. Not only that, but the more money they can pay toward closing, the lower their overall mortgage will be, including their monthly payments.
Saving for a home, even with the help of a partner, can be challenging. Many homebuyers are fortunate enough to have family members willing to contribute toward their down payment, but that isn’t the only expense they’ll need to consider.
Buyers will also need to set aside funds for moving costs and other house-related purchases — after all, they wouldn’t want to put all their money into a down payment and then be stuck with a broken washing machine for months because they can’t afford to have it repaired.
3. Create a long-term plan
If starting a family is in the cards for your buyer, or if they already have a family but intend to have more children in the near future, one of the biggest mistakes they can make is to buy a home that they can’t grow into.
Have an honest conversation with your buyer about their goals and expectations.
Once they can tell you exactly what it is they want, they can start to look for both a home and a mortgage option that can comfortably accommodate their growing family and budget.
For example, a family that intends to stay in the same home for 10 years or more should consider a fixed-rate loan because they can budget their monthly income without having to worry about their interest rates going up unexpectedly.
4. Grow your credit score, and buy at the right time
If you know your buyer intends to stay in the same home for a long time and a fixed-rate loan seems like a sensible option, offer recommendations to help them improve their credit score.
Although they provide predictable, affordable payments throughout the life of the loan, it’s harder to get approved for a fixed-rate loan when interest rates are high. That’s because the higher the interest rate when a buyer applies for a fixed-rate loan, the higher their monthly payment will be, which makes it harder to qualify.
Refer your buyer to resources like Bankrate to monitor loan interest rates, and suggest that they apply for a loan when mortgage rates are low enough to meet their budget.
As their broker or agent, you can also calculate their monthly payment and help them determine how much how they can afford.
5. Lock in a rate as soon as you can
Mortgage rates are subject to change based on fluctuations in the economy — for example, rates climbed in 2014 due to a reduction in stimulus from the Federal Reserve — so it’s in a buyer’s best interest to lock in a rate as soon as possible.
Help your buyer understand the significance of a rate lock by explaining to them the difference between a rate lock and a rate quote, and work with them to research whether rates are predicted to rise or fall to get the best rate.
6. Keep an eye on the market
The housing market is in a near-constant state of flux, shifting from a buyer’s market to a seller’s market and back again on a regular basis.
Encourage your buyer to set Google Alerts for new listings, and refer them to websites, such as Zillow, or local real estate magazines to get an idea of the list prices of family homes in their area so they can see what they can get for their money.
7. Consider your surroundings
Before they find the perfect home, your buyer should do some preliminary research into the town or city they want to live in, starting with its school system:
- What is the reputation of the school district?
- Do the children who live there have to be bussed to another town for school?
- Do the schools in town offer after school programs?
- What types of curricula are available?
- What do other parents think of the school board and the faculty of each respective school in the district?
They should also consider what type of environment they’d like to live in:
- Would they prefer to live in an area that’s rural or metropolitan?
- Would they rather live in an area that’s densely wooded or one with more wide open spaces?
- Would they prefer to live in a neighborhood where the houses sit close together or are spread out?
- How close would they like to be to public transportation?
- Do they want to have a large backyard?
- Is it important that they live near any parks or playgrounds?
- Would they rather live on a quiet street one that’s closer to nearby conveniences?
Details like these make it easier for your buyer to picture what life will be like once they’ve started a family — a quiet cul-de-sac becomes the perfect place to teach their kids how to ride a bike; a hill across the street becomes the ideal sledding spot; a big backyard becomes a blank slate for a swing set, an in-ground pool, a garden or a dog house.
Little details like these aren’t just exciting to imagine — they’re important, and they go a long way toward making a house a home.
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Roger Odoardi is a co-founder, partner and licensed mortgage broker at Blue Water Mortgage Corporation, an independent mortgage broker serving Massachusetts, New Hampshire, Maine, Connecticut and Florida.
