Financial Wellness: Buying a home

 

As we all know, wellness encompasses so many aspects of our day to day lives and one wellness area is financial wellness! Financial wellness talks about the ability to meet your own financial needs and feel secure about your financial future. It also includes the ability and freedom to make choices that allow you to enjoy life. And did you know, financial wellness is closely linked to mental health? 

As we approach the end of the first month of the year, we started realizing there are a lot of you out there looking to sell or buy a home in this new year. This can be such a stressful experience and one that many of us feel ill prepared for because I don't know about you, but we did not receive any formal education around finances, let alone buying a house, when we were in school. 

So we reached out to a mortgage broker we knew, Maria, to get some tips about what we should know about the process of buying a house! Here is what she had to say:

Purchasing a home is one of the biggest financial decisions you can make, and it can seem overwhelming. What are the steps? Who should I contact? How much do I need to save towards a down payment? That’s were real estate professions come in and can help you with all these important questions!

My name is Maria Tagliente and I’m a mortgage broker here in Edmonton and area. My favorite part of my job is helping first time home buyers through the unclear process of purchasing their first home. 

I like to explain the process in a few easy steps:

1. First step is, of course, making sure you have at least 5% of a down payment saved up. If this is your first time purchasing an owner-occupied home, then you can dip into your RRSP contribution and use those funds towards your down payment without getting taxed! The Government of Canada introduced this to encourage and help people who want to purchase their first property. We also have the option where you can borrow your down payment amount as another loan if you don’t have the 5% ready yet. A mortgage broker can set that up for you!

2. ALWAYS get a pre-approval. This step will even come before checking out properties. A pre-approval is when your mortgage broker collects all documents needed (T4’s, current paystub… depending on your profession) AND pulls your credit. This is important because every now and then I find these “50 second online pre-approval forms online”. Don’t fall for these! Think of it this way: if your credit wasn’t pulled, then it wasn’t a true pre-approval and you could be given mislead information about your purchasing limit. After your pre-approval is completed by the mortgage broker, you will then know your true maximum purchasing limit. Your broker will “lock” you in with a rate hold for 90-120 days (depending on the lender). This rate lock guarantees you get the current rate at the time, assuming the rates go up in a month or so. If the rates go down by that time frame, then you can use the current lower rate. This pre-approval is still subject to lender and insurer approval at the time of a true approval submission.

3. You go house shopping with your realtor! Now that you have your pre-approval budget, you and your realtor can shop with confidence knowing you are looking at homes in your house range.

4. Once you find a house you like, you and your realtor put an offer on it. When this is accepted, I get the information of the property from either you or your realtor and send your file off to a lender that we discussed works best for you and your circumstances. Some banks let you have a lower credit, some let you pay off your mortgage quicker, and some have lower rates. The job of a mortgage broker is to match you up with one of the lenders that best fits what you are looking for! I have over 40 lenders I can send to.

5. Approval for your file usually takes around 24 to 48 hours to hear back from the lender and insurer, but because we have you pre-approved the approval should be pretty quick with unnecessary surprises. Once the submission is approved, the lender will send back a few documents to sign that we go over thoroughly, followed by a list of a few “conditions”. These conditions change from file to file, but for the most part they require a 90-day bank history (showing your down payment amount in your account balance), letter of employment, current paystub, and real estate lawyer contact information.

6. Send all needed conditions over to your mortgage broker to review and submit. Once everything is approved by the lender, they then contact your real estate lawyer to finalize a few more things. Your mortgage process is done!

If you’ve been thinking it’s time to make the leap into home ownership, now’s the BEST time to do so. COVID has affected the market in such a way that mortgage rates are at an ALL TIME LOW. If you have any questions, I would love to help get them answered! My email is maria.tagliente@mtgarc.ca and my phone number (call or text) is 780-299-5087.

If you are interested in learning more about the market, what to expect, or what to know more about finances involved in buying a home, please reach out to Maria!

Happy Saturday.