Building a Foundation: Preparing Your Adult Child for Their First Home Investment

Picture this… Your child has reached a major milestone in their life—purchasing their first home.

This is an exciting time filled with anticipation, nerves and perhaps a little bit of stress. As parents, it's natural to want to help your child every step of the way, especially when it comes to such a significant investment. That's why we've put together this guide to help you prepare your adult child for their first home investment. Whether it's financial advice, homebuying tips,or emotional support, we've got you both covered.

Financial Preparation
One of the most crucial aspects of purchasing a home is financial preparation. As parents, you have likely already instilled good financial habits in your child, but buying a house requires a different level of planning and readiness. Here are some key areas to focus on when preparing your child for their first home investment.

Credit Score
A strong credit score is essential when it comes to securing a home loan. Advise your child to check their credit score before beginning the home buying process and if necessary, work on improving it. A high credit score will not only make it easier to get approved for a loan, but also result in better interest rates.

Savings
Encourage your child to save up for a down payment as early as possible. The larger the down payment, the lower their mortgage payments will be. Additionally, having a significant amount of savings shows lenders that your child is financially responsible and committed to making this investment.

Budgeting
Buying a home comes with many expenses beyond just the mortgage payments. Help your child create a budget that takes into account additional costs such as property taxes, insurance and maintenance. Any new homeowner needs to understand the full financial commitment of owning a home.

Home Buying Tips
As your child begins their search for their first home, here are some helpful tips to keep in mind. It isn't rocket science, but a few insider tips never hurt, either:

Location
When looking at potential homes, remind your child to consider the location carefully. Factors such as proximity to work, school districts and neighborhood safety are all important aspects to consider. It's also a good idea to research the area's market trends and potential for future growth. Even a little bit of research can go a long way!

Realistic Expectations
It's natural for your child to have high expectations for their first home, but it's also a good idea to temper those expectations with the reality of their budget. Help them understand what they can realistically afford and guide them towards homes that fit within their means.

Home Inspection
Encourage your child to get a professional home inspection before finalizing the purchase. This will ensure that any potential issues with the home are identified and addressed before they become costly problems. It's better to be safe than sorry when making such a significant investment.

Emotional Support
Buying a home can be an emotional rollercoaster, and your child may need some extra support during this time. You've most likely already experienced this, so here's how you can help:

Listen and Offer Advice
Your child may have questions or concerns throughout the home buying process. Be there to listen and offer your advice, but also allow them to make their own decisions. This is a big step towards independence, so it's good for them to feel in control of the process.

Celebrate Their Accomplishment
Purchasing a home is a significant achievement, so be sure to celebrate with your child once everything is finalized. They need to feel supported and recognized for this major milestone in their life.

Be Understanding
Don't forget to be patient and understanding. This may be a stressful time for them, so try to be empathetic and offer your support in any way they need. Whether it's a listening ear or helping out with some of the tasks involved, your presence and support will mean everything to them.

When They Become Homeowners
After all the preparation and hard work, your child will finally become a homeowner. But even after they've moved in, continue to offer support and guidance as needed. Whether it's helping with home maintenance or offering financial advice, being there for them during this new chapter is invaluable.

Give Them Some Pointers
As they adjust to homeownership, your child may need some practical advice on how to maintain and take care of their new property. Offer your years of experience and knowledge on home maintenance, gardening and other essential tasks. This will not only save them money but also help them feel more confident in their newfound role as a homeowner.

Recommend Contractors and Professional Help
Sometimes, unexpected issues may arise that require the expertise of professionals. As a homeowner, it's important for your child to have reliable contacts for services such as plumbing, electrical work, residential roofing installation and HVAC maintenance. Share any recommendations you have with them to make their life easier.

Enjoy Their Space With Them
Don't forget to celebrate and enjoy your child's new home with them. Whether it's hosting family gatherings or simply spending quality time together, their new home will be a special place for both of you.

With this guide, you can help prepare your adult child for their first home investment both financially and emotionally. Encourage them to carefully consider all aspects of the home buying process and be there to support them every step of the way. Congratulations again on this exciting milestone in both your lives, and don't forget to visit their new home for dinner!

Read more at RisMedia.com

Related Links

• The Perks of Buying over Renting

• Best Indoor Plants for Your Health, According to Research

• Home sellers are returning to the market

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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How to Buy a House: 4 Ways to Purchase Faster and Smarter

If you’re about to embark on the home-buying process, you want to know how to buy a house the quick and smart way.

The process typically takes two to three months, but in a seller’s market with low inventory and strong buyer demand, it could take six months to a year—or longer. But what if you could cut that time in half, without having to make any sacrifices? You’d do it, right?

Of course, you would.

Well, you’re in luck! Take a look at our recommendations for buying a home the smart way.

1. Let the government lend a hand

If you’re in the process of saving for a down payment, you might be able to scrape together the remainder of the money by qualifying for one of the more than 2,200 down payment assistance programs offered nationwide. These programs provide home buyers with low-interest loans, grants, and tax credits.

If you haven’t heard of down payment assistance before, you’re not alone. Many people don’t know about these programs or assume their loans are more difficult to get than they actually are.

You’ll have to meet certain eligibility requirements in terms of income, occupation, or credit, but buyers who use down payment assistance programs save an average of $17,766 between upfront savings and lower monthly mortgage payments over the life of the loan. Visit Down Payment Resource, which offers information on programs, to find a program you could be eligible for.

2. Stay on top of new listings

You can see what houses are currently for sale in your area using Realtor.com®. To stay on top of brand-new listings in your preferred area, however, ask your real estate agent to set up an automated email through the local multiple listing service so that you’ll be pinged every time a new listing that fits your needs pops up.

Tracking new listings in real-time can give you an edge over other buyers because you’ll be in a position to schedule showings right away and potentially make an offer before another buyer even steps foot inside the house.

3. Consider buying a foreclosure

Many home buyers overlook foreclosed and bank-owned properties often because they fear the condition of the home. That’s a valid concern, because foreclosed homes are frequently sold as is—which means the bank is not going to fix any problems (even if you uncover them during a home inspection). However, buying a home that’s in foreclosure has a couple of big advantages.

It’s often worth the investment, given that foreclosed homes sell for an average 15% below the home’s actual value—and foreclosed homes often sell for less than asking price. Also, because there is less competition among home buyers in this sector of the market, you’re less likely to go up against other bids when submitting an offer on a home that’s in foreclosure.

To begin your search you can browse listings of foreclosures on Realtor.com, which might also be marked as “bank owned” or “real estate owned.”

4. Certify that your finances are in order

Closing times are getting longer: On average, it now takes 50 days to reach closing, up from 40 days in 2015, according to a recent report by Ellie Mae, a company that provides mortgage solutions to consumers.

To close faster, your best move is to get pre-approved for a home loan before submitting an offer on a property. A mortgage pre-approval entails a lender running a credit check and verifying your income and assets, followed by an underwriter doing a preliminary review of your financial portfolio. If everything checks out, the lender will issue you a written commitment for financing up to a certain loan amount that’s good for up to 90 to 120 days.

Meanwhile, getting pre-qualified simply means you’ve discussed your finances with a lender and received a verbal commitment for the loan. Consequently, a pre-qualification can cause a home seller to dismiss your offer outright. And even if you somehow manage to sign a sales contract with only a pre-qualification, it’s probably going to take your lender longer to get the loan approved than if you had pre-approval.

Read more at Realtor.com

Related Links

• Newly Built Homes Could Be a Game Changer This Spring

• Should you refinance your mortgage? Here are three signs it’s time, real estate experts say

• The Best Week To List Your House Is Almost Here

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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4 Tips To Make Your Strongest Offer on a Home

Are you thinking about buying a home soon?

If so, you should know today’s market is competitive in many areas because the number of homes for sale is still low – and that’s leading to multiple-offer scenarios. And moving into the peak homebuying season this spring, this is only expected to ramp up more.

Remember these four tips to make your best offer.

1. Partner with a Real Estate Agent

Rely on a real estate agent who can support your goals. As PODS notes:

“Making an offer on a home without an agent is certainly possible, but having a pro by your side gives you a massive advantage in figuring out what to offer on a house.”

Agents are local market experts. They know what’s worked for other buyers in your area and what sellers may be looking for. That advice can be game changing when you’re deciding what offer to bring to the table.

2. Understand Your Budget

Knowing your numbers is even more important right now. The best way to understand your budget is to work with a lender so you can get pre-approved for a home loan. Doing so helps you be more financially confident and shows sellers you’re serious. That gives you a competitive edge. As Investopedia says:

“. . . sellers have an advantage because of intense buyer demand and a limited number of homes for sale; they may be less likely to consider offers without pre-approval letters.”

3. Make a Strong, but Fair Offer

It’s only natural to want the best deal you can get on a home, especially when affordability is tight. However, submitting an offer that’s too low does have some risks. You don’t want to make an offer that’ll be tossed out as soon as it’s received just to see if it sticks. As Realtor.com explains:

“. . . an offer price that’s significantly lower than the listing price, is often rejected by sellers who feel insulted . . . Most listing agents try to get their sellers to at least enter negotiations with buyers, to counteroffer with a number a little closer to the list price. However, if a seller is offended by a buyer or isn’t taking the buyer seriously, there’s not much you, or the real estate agent, can do.”

The expertise your agent brings to this part of the process will help you stay competitive and find a price that’s fair to you and the seller.

4. Trust Your Agent During Negotiations

After you submit your offer, the seller may decide to counter it. When negotiating, it’s smart to understand what matters to the seller. Once you do, being as flexible as you can on things like moving dates or the condition of the house can make your offer more attractive.

Your real estate agent is your partner in navigating these details. Trust them to lead you through negotiations and help you figure out the best plan. As an article from the National Association of Realtors (NAR) explains:

“There are many factors up for discussion in any real estate transaction—from price to repairs to possession date. A real estate professional who’s representing you will look at the transaction from your perspective, helping you negotiate a purchase agreement that meets your needs . . .” 

Bottom Line

In today's competitive market, be sure to work with a local real estate agent to find you a home you love and craft a strong offer that stands out.

Read more at KeepingCurrentMatters.com

Related Links

• First-Time Home Buyer Checklist: Have You Done Everything?

• Finding Your Perfect Home in a Fixer Upper

• Weekly mortgage demand jumps again as interest rates fall just below 7%

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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First-Time Home Buyer Checklist: Have You Done Everything?

A first-time homebuyer checklist can take a major weight off of your shoulders when you’re ready to buy your first home.

It’s a big step—and one where it’s wise to know for sure you’ve got all your ducks in a row first.

First-time homebuyer checklist

To help you figure that out, here’s an all-in-one first-time homebuyer checklist with everything you should make sure you have covered before you set off on your hunt—or, if not, consider this a prime opportunity to get started.

Step No. 1: Find a real estate agent

Most rookie home buyers begin their house search online by browsing listings, which may be a mistake for a couple of reasons.

First, you might be looking at homes that are outside your price range—and you don’t want to fall in love with a home that you can’t afford. More important: You’re embarking on this quest on your own when you should be letting a seasoned professional guide you through every step of the homebuying process. Bonus: It’s no cost to you as a buyer to use an agent, so you’re getting free advice by using a real estate agent—no strings attached.

Here’s more on how to find a real estate agent in your area. Make sure to scrutinize agent reviews—paying close attention to years of experience, number of homes sold, and what neighborhoods the agent specializes in.

Step No. 2: Talk to a mortgage lender

Although some experts recommend buyers do this before finding a real estate agent, there’s a significant benefit to talking to an agent first: “You need to shop for a lender locally, and real estate agents know which local lenders are trustworthy and which aren’t,” Realtor.com says.

Therefore, ask your agent for two to three lender recommendations. Talking to multiple lenders will enable you to fully assess your financing options with no obligation to pick until you’ve found one that’s right.

The goal is to get pre-approved for a home loan. To do that, you’ll need to provide the lender with a significant amount of paperwork, including bank statements, pay stubs, W-2 forms, 1099 forms, and tax returns. If the lender decides to offer you pre-approval, you’ll receive an estimate of what size loan you would qualify for and approximately what interest rate you’d get.

Pre-approval is typically good for 90 to 120 days; however, “it’s easy to renew it if the borrower’s financial picture doesn’t change,” says Richard Redmond, broker associate at ACM Investor Services, a private lender in Larkspur, CA, and author of “Mortgages: The Insider’s Guide.”

A good mortgage lender will also be able to help you determine which type of loan is right for you.

Step No. 3: Improve your credit, if needed

When you meet with a mortgage lender, the lender will pull your credit score. Although a perfect credit score is 850, all scores 760 and above are considered to be in the best credit score range—meaning you would qualify for the most competitive interest rates. (For comparison, a good credit score is from 700 to 759, a fair score is from 650 to 699, and a score of 300 to 649 is considered poor.) Your credit score is calculated based on a number of factors, including your debt payment history, debt-to-credit utilization, and length of credit history.

If you find that your credit score is subpar, you may be able to take steps to boost your score. Just keep in mind that you won’t improve a credit score overnight. Indeed, you may need to postpone your house search for a few months in order to mend your credit.

Step No. 4: Determine where you want to live

To focus your house hunt, you’ll need to decide where you want to settle down. If you don’t have your heart set on a particular neighborhood, think about what areas are best suited for your commuting needs, school requirements, proximity to family and friends, and overall lifestyle.

Need help digging up information? At realtor.com/local, you can enter a town, neighborhood, or ZIP code to find out more about the area, like the median home price and quality of public schools.

Step No. 5: Don’t damage your credit

When you’re in the process of buying a home, you need to walk the straight and narrow with your finances. Why? Because your loan doesn’t get fully approved until it goes through underwriting—which could take place just a few days before closing. To keep your credit score stable, you’ll want to avoid taking on new debt (e.g., getting an auto loan), opening new credit cards, neglecting student loan payments, or falling behind on credit card payments.

Read more at Realtor.com

Related Links

• The Benefits of Downsizing When You Retire

• Finding Your Perfect Home in a Fixer Upper

• Weekly mortgage demand jumps again as interest rates fall just below 7%

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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New Student Loan Repayment Plan Could Make It Easier For Borrowers to Become Homeowners

A new, more affordable repayment plan for federal student loan borrowers may come with another advantage: It could make it easier to become a homeowner.

The Saving on a Valuable Education, or SAVE plan, can cut borrowers’ monthly payments in half, and leave many people with a $0 bill. The Biden administration officially rolled out “the most affordable repayment plan yet” over the summer.

“Switching to a repayment plan that has a lower monthly payment can help a borrower qualify for a mortgage,” said higher education expert Mark Kantrowitz.

Half of student loan borrowers — including 60% of millennial borrowers — who haven’t yet purchased a home say their education debt is delaying them from doing so, according to a 2021 report by the National Association of Realtors.

Here’s how the SAVE plan could soon change that, experts say.

Smaller payments can help prospective homebuyers

Your debt-to-income ratio, which is usually calculated by dividing all your monthly debts by your monthly income, is a key factor in mortgage underwriting, said Christelle Bamona, a senior researcher at the Center for Responsible Lending.

“Those eligible for SAVE will experience reduced payments, which will in turn lower their debt-to-income ratio,” Bamona said. Most borrowers should qualify for the SAVE plan as long as their loan is in good standing.

Borrowers making payments on their student debt who enroll in SAVE could see their ratio fall somewhere between 1.5% to 3.6%, according to a new report by the Center for Responsible Lending.

Here’s how that happens.

For one, the SAVE plan increases the income exempted from your payment calculation to 225% of the poverty line, from 150%. As a result, the first roughly $33,000 of your income won’t be factored into your monthly obligation, up from around $23,000 on the other income-driven repayment plans. These numbers represent single individuals. More income is protected as family size increases.

Starting in July, an even bigger perk of the plan will be available.

Instead of paying 10% of your discretionary income a month toward your undergraduate student debt under the previous Revised Pay As You Earn Repayment Plan, or REPAYE, borrowers will be required to pay just 5% of their discretionary income. The SAVE plan has replaced REPAYE.

Kantrowitz provided some examples of how much borrowers could see their bills drop.

Previously, someone who made $40,000 a year would have a monthly student loan payment of around $151. Under the SAVE plan, their payment would fall to $30.

Similarly, someone who earned $90,000 a year could see their monthly payments shrink to $238 from $568, Kantrowitz said.

In the past, most mortgage lenders assumed that a borrower’s monthly student loan payment was a certain percentage of their loan balance, even if the actual payment was lower, Kantrowitz said.

Fortunately, he said, “They now base it on the actual loan payment.”

There’s one catch: Many mortgage lenders won’t use a $0 monthly student loan payment in their underwriting process, which the SAVE plan could leave many borrowers with. In such cases, lenders may still calculate your monthly obligation as a share of your total debt.

The Center for Responsible Lending wants to see this change.

“By not counting their monthly payments as $0 in the underwriting process, lenders are artificially inflating consumers’ monthly debt obligation,” Bamona said. This could potentially prevent millions of low-income Americans from getting a mortgage, she added.

Saving for a down payment may be easier under SAVE

The SAVE plan may also help more people get in financial shape to buy a house, experts say. That’s because a smaller monthly payment could enable them to direct more cash to their savings, and reach their down payment goal faster.

Student loan borrowers who are first-time homebuyers may also be eligible for financial assistance, Bamona said, and should research their options.

“Grants or down-payment assistance programs may be accessible to first-time homebuyers, provided by agencies and organizations within their state or municipality,” she added.

Read more at CNBC.com

Related Links

• Bridging the Gaps on the Road to Homeownership

• Why Pre-Approval Is Even More Important This Year

• From Surging Layoffs to a Presidential Election: What Will 2024 Bring for the Housing Market?

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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