Buying a home is one of the largest purchases in anyone’s lifetime. Like any big commitment, preparation makes all the difference in the value received. Helping first-time clients understand how to get started will make them trust your brand and return to you in the future. Here are some examples of what they’ll want to know:
Checking Their Credit Score
Many first-time homebuyers already have a “mortgage” called student loan debt. They may even have a retail credit card opened for a discount which they forgot about, or some other surprise. Advise them that how much debt they have compared to their income—aptly called debt-to-income ratio—will be a big factor in whether their loan is approved. Your client will have a much better idea of how to prepare for a good mortgage rate.
Make sure they know sites like Quizzle.com are a simple way to check credit scores. They should also be aware that a credit score of 720+ gets the best mortgage rates, while a score below 630 will make things difficult. If their score is struggling a bit, explain that getting a “bad” mortgage rate due to a low credit score won’t trap them! They will be relieved to know that refinancing is an option once their credit or income increases. Millennials will be particularly happy if you offer special plans for consolidating student debt.
Mortgage Preapproval Options
If the section about checking credit makes your client sweat, consider talking to them about mortgage preapproval. The last thing your client wants is the effort and heartbreak of falling in love with a home only to realize their credit can’t cover it. Let them know preapproval allows you to help them find the home they can afford by calculating the loans they are eligible for ahead of time. This could sound like an extra step to your client, but it actually streamlines the home buying process. Show their offer will be stronger compared to other buyers when it’s already backed by you.
If mortgage payments are their issue, QLMS has products like YOURgage that allow you to offer your client a mortgage anywhere between 8 to 30 years. Perhaps they’ll feel a little safer with an 18-year mortgage instead of higher payments over 15 years, or dragging payments out to 30 years.
Talk About Title Insurance
Explain that title insurance is more of an “ensureance” because it verifies that the seller actually owns the home being offered to your client. It also makes sure the home doesn’t have an existing debt that the client would have to settle once the house is in their name. Some don’t know that companies like Amrock pore through the home’s history of ownership, check for any liens or outstanding debts on the property, and guarantee coverage if something isn’t right.
You should inform the client it’s technically negotiable who pays for title insurance, though it’s customary for the home seller to pay. Assure your client that while the signing agent might only be present during closing, that agent will bring written evidence of solid ownership—including the deed—for the client’s signature. Remind the client they will usually receive their recorded deed and unsigned document copies in the mail (they might expect it at the closing table!)
Overall, be honest and talk to your client about the process. When the client feels they can rely on you for earnest and useful information rather than a sales pitch, you’ll build a relationship that lasts, and likely a few referrals to boot.