7 Steps Apartment Renters Can Do to Prepare for Homeownership
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Homeownership is a primary goal for many people, especially millennials who are at the prime age when most consider buying a home. The choice to live in an apartment may not be their first option but for many, it is the only option until the inventory of available homes for sale increases.
Here are some tips you can share with your clients on steps that they can take now to help increase their chance of making that dream a reality.
- Budget for the Future
In addition to a down payment on a new home, there are many other potential costs that buyers must budget for as well. These typically range from 2% to 5% of the home’s purchase price.
If they are renting, they may have to break their lease at some point. It’s important to prepare for this financial hit when they are budgeting for their new home.
2. Improve Credit Scores
Their credit score is a crucial factor in determining their eligibility for a mortgage and the interest rate they’ll receive. Encourage your clients to take advantage of this time as a renter to perfect their credit score as much as possible.
Other important steps they can take include paying their bills on time, avoiding making major purchases unless necessary and keeping credit card balances low. They can also obtain a free copy of their credit report to check for errors or areas that need improvement.
3. Reduce Debt
When a potential buyer applies for a mortgage, lenders will look at their debt-to-income ratio, which compares monthly debt payments to income. Encourage your clients to create a plan to pay down their debt and avoid taking on any new debt before applying for a mortgage.
4. Get Preapproved for a Mortgage
This is an important step because it shows sellers that the buyers are serious about buying a home. It also gives a lender a clearer picture of the buyer’s finances and allows the buyer to rectify any financial errors or problems that may arise later.
5. Consider Additional Financial Options
There are several government programs that can help first-time homebuyers, including FHA loans, VA loans and USDA loans. Many financial institutions also have their own programs. In some circumstances, family members may offer monetary gifts or loans.
6. Be Flexible
With the market being so tight, it may take some time before your client finds their dream home. Conversely, it may happen sooner than they think. Have a discussion with your client at your first meeting with them to determine what they are and are not flexible about including such things as timing, price, location, style of home, concessions and price.
7. Assure Them You’ll Be There Every Step of the Way
As a qualified, experienced real estate agent you are uniquely positioned to help guide your clients through one of the most stressful and major events they will ever undertake. Assure them that you are their partner throughout the whole transaction and ready to help them every step of the way. Having other trusted professionals that you can refer them to if needed, such as mortgage lenders and home inspectors, among others, will help them feel more confident as well.
If you would like to learn more strategies to help you be the confident, professional agent your clients will come to rely on, we’ve got you! Visit buffiniandcompany.com/bc to schedule a free call with one of our experienced Business Consultants.