10 Tips to Help Your Client’s Financial Outlook Before Buying a Home

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Your loan officer will work with you and your agent to advise you on a whole range of strategies and options to help you achieve your goals.

Great real estate agents understand the importance of guiding clients through every stage of the home-buying process. While searching for the perfect home might seem like the most exciting part of the journey, it’s also crucial to make sure clients have a solid financial foundation before making their purchase.  

Not only can understanding a client’s financial health help ensure a smooth mortgage process, but it can also be a key to forming long-term relationships. When homebuyers have a positive financial outlook, they’ll feel more confident and secure in their decisions. Providing sound advice can position you as the go-to real estate expert, increasing the chances that your clients will turn to you when it’s time for their next move or when family or friends are looking for a trusted real estate professional.  

What Do We Mean by Financial Outlook?

The term “financial outlook” refers to a client’s present financial situation and future projections. It’s not only about their down payment or the amount of money in their bank account. Instead, it also includes factors such as credit scores, debt-to-income ratios, investment portfolios, job security, projected future earnings, and more.

Homebuyers with a strong financial outlook may find it easier to secure a home loan and may also receive a more favorable interest rate. Perhaps more importantly, this can help ensure they’re financially prepared for the commitment of purchasing a home.

While real estate agents aren’t financial advisors, understanding a client’s financial outlook can help you guide them effectively when it comes to decisions like whether they’ll be able to comfortably afford necessary home renovations or handle home-related expenses without excessive stress. Taking a holistic approach can help clients make decisions that align with their broader financial goals, ensuring that their home purchase is a stepping stone toward long-term financial success.

Setting Up the Initial Loan Application

Securing a home loan is one of the first and most important steps in the homebuying process. Real estate agents can help their clients through the process advising them on how to get their finances in order. This includes:

  • Checking Their Credit Score: Before applying for a home loan, clients should review their credit report to make sure there are no errors and take steps to resolve any problems they uncover.
  • Paying Down Debt: If possible, advise clients to reduce outstanding debts, especially high-interest ones like credit card balances. This not only improves their debt-to-income ratio but also demonstrates financial responsibility.
  • Maintaining Steady Employment: If a client is considering changing jobs, advise them to wait until they’ve closed on their home. Lenders prefer stable, consistent income.
  • Gathering Necessary Documentation: The loan application process will go smoother if clients have all the required documents ready. Remind them that they will likely need their tax returns, recent pay stubs, and bank and investment statements.
  • Avoiding Major Purchases: Making large purchases, like a new car or furniture, could jeopardize a client’s mortgage approval by impacting their credit score and debt-to-income ratio. Be sure to advise your clients to hold off on these types of purchases until after they close on the home. 

You may also suggest that they explore various loan types, from conventional to FHA, shop around to find the right lender and get preapproved. All of these steps can help streamline the loan process and lay important groundwork that can make the rest of the homebuying journey easier and less stressful.

Setting Your Clients Up for a Successful Journey in Real Estate

It’s crucial for clients to understand that owning a home is about much more than the initial transaction, and for real estate agents to remember that their responsibility doesn’t end once the keys are handed over. To truly provide value and build long-term relationships, focus on setting clients up for sustained financial stability.

Here are some strategies to help ensure your clients remain satisfied homeowners.

1. Educate on Total Cost

While many clients are focused on the cost of the home, you must make sure they are considering other expenses like inspection fees and closing costs. Also make sure they have a solid estimate of their ongoing expenses including property taxes, homeowner’s insurance, potential homeowner’s association fees, and home maintenance costs.

2. Discuss Future Resale Value

Even if the client isn’t thinking of selling anytime soon, it’s crucial to consider the home’s potential resale value. This includes discussing aspects like the neighborhood’s future prospects, upcoming infrastructure projects, or any planned developments that could affect the home’s value.

3. Recommend a Home Inspection

A home inspection might seem like another added cost, but it can save thousands in the long run. Going through this process can identify potential problems early on, allowing clients to either negotiate repairs or reconsider the purchase. While it’s technically optional, it’s highly recommended.

4. Advocate for a Realistic Budget

You may need to remind your clients that the mortgage amount they’ve been approved for might not be practical for their lifestyle. Before they take out the maximum mortgage, encourage your clients to consider other monthly expenses and long-term financial goals, as this can help them set a realistic home-buying budget. 

5. Stress the Importance of an Emergency Fund

After purchasing a home, clients might feel financially stretched. Emphasize the importance of rebuilding their savings for unexpected home repairs or financial emergencies.

6. Introduce Clients to Tax Benefits

Homeownership comes with various tax deductions and credits. Make sure your clients know that they are available and suggest working with a tax professional who may be able to help further improve their financial outlook.

7. Remind Clients of Home Equity

Remind your clients that over time, as they pay down their mortgage and the home’s value possibly increases, they’ll build equity. This equity can be a powerful financial tool, serving as collateral for loans or a source of funds if needed.

8. Stay Updated on Current Trends

By understanding the changes in mortgage and real estate trends, you can reach out to past clients when it might be a good time to re-evaluate their situation. This may include refinancing for a better rate, upsizing or downsizing, or exploring property investment opportunities. 

9. Offer Maintenance Tips

Regular maintenance can prevent costly repairs down the line. Offer clients tips on how to maintain their property, or suggest resources or professionals that can help.

10. Recommend Financial Advisors

For clients who are uncertain about their financial standing or future, it may be beneficial to suggest a meeting with a financial advisor. These professionals can offer advice on budgeting, investments, and other financial decisions related to homeownership.

By proactively addressing these areas, not only can you help your clients with their immediate home purchase, but you’ll also help ensure they have a positive financial outlook both now and for the long term. 

How Keller Home Loans Can Help

At Keller Home Loans, we’re more than just a financing solution – we’re your partner in helping your clients successfully secure their dream homes. We provide tailored solutions and competitive rates, helping you to provide a seamless homebuying experience.

To learn more about how we can help your clients, contact us today.

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