Young first time home shoppers, Jan and Keith texted me over the weekend to embark on their first ever home buying expedition. Being the ‘babes-in-the-woods’ that they were, we asked if they would have some time to sit down with us to discuss their vision of their first home and allow us to bring that vision closer to reality.
The goal of a first meeting with prospects is to not only determine the needs and wants, but also help our clients with the decades of experience by putting the most effective tools in their hands to make their dreams become a reality.
One of the most important items we discuss is their credit worthiness and ability to secure the mortgage funding that will be needed. We find many first time home buyers are buying for a multitude of valid reasons and often, the timing is not perfect. By that I mean, many buyers are ill-prepared with inadequate down-payment, or closing funds, and as a result, will be forced to seek funding from government insured sources like Fannie Mae, Freddie Mac, or from the government through Ginnie Mae, or even in select cases, USDA, or VA guaranteed funding.
When dealing with non-conventional funding, there are often benefits, but also, there are higher costs over the life of the loan. Sure the FICO score threshold necessary for loan qualification is lower with these funding sources as a general rule, but when the borrower(s) lack the necessary down-payment, and place the minimum down (less than 20% of the purchase price), there is Mortgage Insurance (MI) involved that will add to the overall loan cost by increasing the monthly payment and in so doing, reduce how much may be borrowed. That’s right folks! The government ‘giveth and taketh away’!
So how do we move forward?
We like to interview our prospects to determine if they are aware of the responsibility they are planning to assume and if they are prepared for the ‘bumps in the road’ that are sure to be encountered at least over the first 5-7 years. Job loss, relocation, etc. are first considerations, then when we find the ‘picture-perfect home’ and the home inspection has revealed, for example, that the roof, although not needing repair, has only 5 years anticipated life left. Are these buyers going to be capable of dealing with this issue?
You see; as our clients’ agents, we partner with them to try to paint the most realistic picture of what to expect and anticipate. It gives us comfort in knowing that we will not be setting the stage for a failed marriage, and homelessness and in some cases, we do recommend a delay in the home search process to allow our prospects to better prepare for their future as homeowners.
We don’t just want to sell a house; we want to help our clients buy a HOME!