Going through the home buying process is a terrific opportunity to teach your kids the importance of buying a home. While your children may
be wrapped up in the excitement of a new house, neighborhood and friends, they can also benefit from learning about the amount of preparation that went into finding their new home. Guiding your children (ages 10+) through the home searching and buying process shows them what goes into making such a large financial decision.
1.) Save early: It’s never too soon to start saving. 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 to you, as well – your family’s home. Help them understand they need to plan and save their money so they can make that exciting new purchase!
2.) Needs vs. wants: No two homes are built the same just as no two people’s home requirements are the same. While some people need four bedrooms, others need an expansive backyard. Explain to your kids the difference between the home features your family needs (ex. four bedrooms) and luxury features you want (ex. in-ground pool). 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 a real estate agent when buying a home. 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 their client’s behalf.
4.) Research and shop around: Teach your children the importance of doing their own online research in addition to working with a real estate agent. Let them know the importance of researching the school district, neighborhood safety, nearby conveniences, home price comparables, public transportation options, etc., before they decide on their dream house. These factors will also be important when it comes time for them to sell their home.
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 they will ever take on. Teach them the terms:
- • Principal: The sum of money borrowed to purchase your home.
- • Interest: What the lender charges you to use the money you borrowed.
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!