Buying a home is one of the biggest financial moves that your clients will ever make. There are a number of issues they should be aware of, including how the costs of purchasing and owning a home will impact their overall financial planning goals.
In this checklist we cover a number of financial issues that your clients need to consider when buying and owning a home, including:
- Cash flow issues that your clients need to consider including the costs to maintain the home once they own it, the impact owning a home will have should one spouse need/want to quit working to raise children as well as how long your client intends to live in the home.
- Depending upon your client’s circumstances, there might be issues around their being able to qualify for the most advantageous mortgage terms. There also might be special programs for them to consider, for example if they have served in the military. Additionally, there are a number of issues they need to be aware of before, during and after applying for a mortgage.
- When buying a home, there are income tax and estate planning issues to be considered, including how to properly title the home if the client is married. The size of the mortgage will also come into play in terms of the ability to deduct some or all of the interest on the mortgage.
- Your clients will also need to ensure that they have proper life and homeowner’s insurance coverage. Depending upon the state in which the client is located, there may be state-specific issues to discuss with them.
This is a comprehensive checklist of the types of issues that advisors should be discussing with their clients who are considering purchasing a home. Clients are not always fully aware of all of the financial ramifications of such a major financial decision, it is your job as their advisor to ensure they are equipped to deal with these issues, allowing them to enjoy home ownership to its fullest.
Updated for 2020