If you are considering buying a home – especially if your last purchase did not end well, it’s a great time to talk about home ownership with your children. In fact, it’s the perfect time to not only hear what your kids think about buying a home, but also what concerns they might have! As adults we understand the importance of buying a home, but with today’s news having so many negative stories, when it comes to home ownership, this “family” discussion is an important one.
Why are you going back into the home buying market? Depending on your previous experience, this might seem pretty scary to them. Again, as adults, we know that home ownership is an important development step for many children – and while it is an exciting time, especially for children who are 9 to 12 years old, understanding the thought process and the financial decisions will make this an easier transition.
What to Teach Kids About Buying a House
1.) Save early: We are big Dave Ramsey Fans. He has a wonderful program to teach kids about saving. We highly recommend Financial Peace Junior. As your kids save their own money for items important to them, such as the latest game or pair of shoes, show them you have been saving for a purchase that is important for your family’s future… a home.
2.) Needs versus wants: Help your children understand that there’s a big difference between needs and wants. Sure, maybe your family would like some luxury features in a new new home, but not everybody has a pool in their backyard. Not every house comes with a place for a dog. There are somethings that we WANT – and then there are some features that maybe your family NEEDS – like a downstairs bedroom for grandparents who want to visit. Teach your kids the importance of identifying the features you need in your family’s home and encourage them to separate their needs from their wants when making purchases large or small.
3.) Work with a real estate agent: Stress the importance of working with an Expert when it comes time to buy any MAJOR purchase. When you are purchasing a home, that means working with a Real Estate Agent who has the experience and the knowledge to help negotiate the best offer. While doing your own research is important, a real estate agent is the best resource for offering expert advice on the neighborhood, pricing and negotiating on your behalf. We personally recommend that you get your OWN representation, as opposed to working with the Seller’s Real Estate Agent / Representative.
4.) Research and shop around: Teach your children the importance of doing their own online research. It’s not just about them home, you need to know what credit score requirements are needed, how to improve your score so that you qualify for a mortgage loan.
5.) Payment: Without getting too specific, help your kids understand that most people require a loan to purchase a home and a new house is something that will be paid for over time. This loan is called a mortgage and will most likely be the largest debt your family will ever take on. Teach them the terms, because they are going to be listening closely to the conversations, and the discussions about Credit Scores, payments and down payments (or no money down loan types) and the cost of borrowing the money to buy the house.
- Principal – The sum of money borrowed to purchase your home.
- Interest - What the lender charges you to use the money you borrowed.
- Mortgage Insurance (or PMI) – The Insurance that the Bank requires to cover any future loss
- Closing Costs – The fees charged in relation to getting the loan
Including your children in the home buying process will help them appreciate their new home more and hopefully set them up for an easier future when they look to purchase their own first home!
Tired of Renting and ready to buy a home in NC, please call Steve and Eleanor Thorne 919 649 5058 – we offer today’s best mortgage rates, and we know what Underwriters in NC are looking for! Connect with us on Facebook!