Does a Financial Planner have a role in the Home Buying Process?

Does a Financial Planner have a role in the Home Buying Process?

Interesting question...having been active in Real Estate for a number of years, this is a subject that has never really crossed my mind, nor has it come up in the course of any transactions.

But....if you think about it....the purchase of a home is the largest financial investment/transaction the average person will ever make. 

The mortgage professional can tell a home buyer if they can purchase a home, but not if they should purchase a home....or...if they should possibly purchase a home, but maybe not one at as high a price point as the mortgage professional can get them approved.

As a Real Estate Professional, I skirt this issue constantly.  How much do I dig into someone's finances?  Is it my place?  I make it a habit of running numbers on potential homes early in the buying process, and always ask if the client is comfortable with the figures, but I never delve into how this potential home purchase fits into their overall financial plan....I mean really....I am no where near qualified to advise someone at that level.

And I can guess what some realtors are thinking...."This is going to cut into my commissions.  If someone is going to advise my client to purchase a lower priced home....I won't be making as much"

My answer to that..."Yep!  You are absolutely right!"

But...you are going to have a client that will probably be happier and with much less stress.  There is less likelihood you will be getting a call from them in 2 years to list the house because they are behind on their payments, and you are more likely to get additional referrals!

From the consumer's perspective....you do not want to be "House Poor".  What is the sense of having this nice new home if you can't afford the normal maintenance and struggle to find the extra cash to order a pizza on a Friday night? 

So...although I may not know exactly how a Financial Planner will fit into our practice, I do know that the next time I run across a buyer who seems to be severely maxing out their mortgage limit, I will definitely discuss the potential benefits of speaking with a Financial Planner prior to finalizing any decisions.