Financial Health| Talking Mortgages!

It is no secret I am a firm believer in financial knowledge. I have blogged about household finances in the past to create awareness on the importance of understanding your full financial picture.

Knowledge is power, which is why I teamed up with Ashley Champagne to talk about mortgages. Ashley is a Mortgage Agent and helps countless people achieve their dream of homeownership. Ashley helps potential home buyers understand what they can afford and what lenders will do for them.

32535_402720387148_6509169_nA house is probably the largest financial commitment you will make in your life time, a great reason to make sure it is done right! I had a chance to sit down with Ashley to ask her a few questions.

Here is what she had to say!

Q- Household finances are extremely important to understand and be on the same page as your partner on. In preparation for buying your first home or upgrading, are there any tips you could offer to make the process easier?

A- Absolutely! The most important thing you can do when you begin the home buying and mortgage process is to be informed. Do not be afraid to do your research. This doesn’t mean you have to know every step of the process (leave that to the professionals), but knowing some terminology and standard processes will most definitely assist you on your journey.

Another important aspect is to understand your affordability or more importantly a payment you are comfortable making each month.  You need to be all inclusive when looking at your finances or budget; mortgage payment, property taxes, home insurance, possible condo fees, etc.  Deciding on a monthly amount can help lead you to a mortgage amount, which in turn sets your budget for house hunting.

Next, build a team.  As a real estate investor, I have learned the importance of building the right team of professionals to achieve my goals.  Again, don’t be afraid to do your research and ask a million questions, your team should work for you.  It should include a Mortgage Agent, Real Estate Agent, Insurance Broker, Property Inspector, and Lawyer.  You’ll note I put Mortgage Agent as number one.  No, I am not being biased, you MUST get your financing in order first.  It is very tempting to go looking at properties, get excited about your dream home, and put an offer in.  Then what? Can you afford that mortgage? Will you be approved for a mortgage? You want to fulfill your dreams of homeownership, not crush them by jumping the gun.  Attaining a Mortgage Agent is free of charge for you as a homebuyer and comes with many perks; a personal relationship with someone who is working for you, a single credit check, and access to multiple lenders. This offers you the most variety for your mortgage needs. Don’t limit yourself!

Q- Are there aspects of “pre-approval” amounts you should be aware of when purchasing a home?

A- I think the number one misunderstanding when it comes to a pre-approval is the word “approval”. Although it is a great guide, this is not a guaranteed mortgage. It is all dependent on a full disclosure application, proof of declarations, and the actual property to be purchased. When placing an offer on a home I strongly advise to ALWAYS place a condition of financing in it. This means your offer is valid providing your financing is approved. Don’t allow a bank, or anyone for that matter, to glance at what they have on file or have a verbal discussion with you as a way of obtaining a pre-approval.

As a Mortgage Agent, I insist on a fully completed pre-approval application; the same way I would for an actual mortgage application. This ensures everything is fully disclosed to the lender in advance, we know the exact financial situation, and providing everything remains the same (credit balances, income, etc.) it is a simple and smooth transition into the application. Referring to my previous comment of “understand your affordability”; it is extremely important to assess your personal situation. You may make a great income, carry little debt, and have a great credit score, which would clearly put you in a position for a great pre-approval, but that doesn’t always mean take the maximum mortgage and go house hunting. Stop and think. What do the next few years look like? Do you plan on having kids? Will this lessen your income and make a maximum mortgage unaffordable? Your team can help guide you along the way, but it is up to you to make the right decisions.

Q- Any other expert tips?!

A- Yes, be honest. It may be tempting to exclude information or inflate numbers to make your application look better. In the end you are limiting yourself and the people who are trying to help you. The right professional will take your application, assess it and help guide you in the right direction for your personal situation. There are many financing paths available for different needs.Another “rule” I stress to all current and potential clients is to avoid being rate driven. At this point, all interest rates are the lowest we have ever seen. Don’t let 0.10% of a rate determine which type of mortgage you accept. Focus more on what your needs are in a mortgage. Do you want the ability to pay down your mortgage faster? Or make large lump sum payments? No mortgage is one in the same, do your research and remind yourself you don’t need a rate, you need the right mortgage product to suit your needs.

When you take the time to set yourself up for success, it will pay off and avoid any unnecessary stress.  Make the process fun and exciting!



My Relationship with Money

Money… it makes the world-go-round, it is a necessity to survive. Money can cause feelings of jealousy, create competition or leave you with feelings of joy. Some use money as a source of emotional therapy by spending it to fill a void.

My relationship with money has been, well… interesting. Let me explain…

hugging-money-7948289I got my first job the week I turned 15, it was at a fast food restaurant and I made $6.45 an hour. Let me tell you, I thought I struck it rich! This girl had money to spend on clothes, makeup and movies!!! In my first year of working, I spent every penny I made and I mean every penny. Within days of getting my paycheck I would have whopping $1.50 left in my bank account. I worked as much as I could, picking up shifts and staying later just to have more money to spend.

Naturally, my parents were concerned. I remember them telling me I better start saving some of that money, I will need it for university. I remember thinking to myself, “Phff, I have lots of time to save money! Do they know how much I even get paid?? I make lots!!” Oh the wisdom, right?! My whole $200 bi-weekly paycheque…

To my parents credit, they always taught my brother and I financial knowledge. They would teach us the difference between a need and a want, provide us a modest allowance and make us use our allowance to pay for wants.

After a year of working my first job by I started looking into careers. I would attend my Guidance Counselor’s office frequently, taking personality and interest testing, trying to figure out what I wanted to do for the rest of my life. During that process, the topic of cost started to come up. The Counselor would give me booklets on schools that contained the estimated cost of your first year of school. An emotional breakdown ensued, not only did I have no idea what I wanted to do for the rest of my life, but the cost was huge! It was my light blub moment.

I started to save almost every penny I made. I picked up a second part-time job where I could do my homework while I was at work to ensure my grades didn’t drop. Saving started to become a game. That game started to become an obsession. My parents saw my behaviour swing the opposite way completely, I was beginning to become money obsessed and they were equally as concerned as before. I am sure they were thinking, “Can’t the girl find a happy medium??”

My approach towards money from the time I was 16 until today hasn’t changed much. Saving money is a security blanket for me and I am not sure that is a good thing. I have a very difficult time treating myself to luxuries or rewarding myself for working hard. There is a guilt that surrounds spending money on wants, which I believe is equally as unhealthy as spending everything you make. Mentally and emotionally you beat yourself up for spending money on yourself, it is unhealthy. That is not to say I haven’t achieved some great things because of my ability to save but there is always a flip side to everything.

Being the Budgeting Queen that I am, I have started to provide myself a weekly allowance. Those allowances are to treat myself. I don’t spend that money every week but I do treat myself more often than I used. I am working my way towards that healthy middle ground and slowly, I am getting there.

Money plays a different role in everyone’s life, some healthier than others. It is important to understand your relationship with money regardless of what those feelings or behaviours may be.


Looking to Save Money on Your Renovations?

9f7588d9cd558f81857057935a6d2313Let’s face it, renovations can be expensive. Heck… a simple facelift of a space can start to add up!

When my husband and I were recently renovating our front entry, we made sure to look for ways to save money without sacraficing quality.

Here are a few ways we have saved money:

1. I painted the door and frame myself. To colour match our door and have the frame arrive pre-treated, it was going to cost us over $1,000 more. Personally, I felt that was outrageous when it was something I could do myself. I have painted many things over the years and consider myself knowledgeable in this area. Make sure you do your product research first!

2. Try to be flexible with your time. Almost all trades charge a premuim rate for off hours work. If you can coordinate to be home for service during regular business hours you will keep the necessary services at a reasonable rate.

3. If you possess the capabilities to complete the renovation yourself, do it! However, be honest with yourself. There are some things (plumbing, electricial, etc) that should be done by a licensed professional.

4. Pay cash!!! I will sing this from the roof tops over and over again! Stay away from “Buy now, pay later” or the dreaded credit cards, in the end the renovation will cost you way more than it did originally. If you can’t afford to pay cash, question if this is the right time to be completing the work or if you can truly afford it. If the work is necessary pull from your emergency fund, something every home owner should always have! ZERO excuses.

Happy Renovating!


How do you Budget?| Part 2

As a follow up to yesterday’s overwhelmingly positive post (Thank you!!), I wanted to share some general approaches that may make budgeting easier. The following work for our household and perhaps they will work for you as well:

Always review the household budget with your partner. One person can put it together, but it is essential to be on the same page with all financial goals.

Revisit your budget every 6 months to a year. A lot can change year-over-year and your budget should grow with you. Our budget has looked about a million different ways in the last few years because our circumstances have changed, so it was important to make amendments to account for those changes.

Be flexible. There will be months where your actual spending will not match what you have budgeted. That is okay. It is important to maintain a levelheaded perspective and get back on track next month!

Always have an emergency fund. I know I have preached about this in previous posts (seen here), but I cannot stress this enough. If your budget does not allow for the 3% rule of thumb, put aside what you can afford. It is better than nothing at all.

Have realistic goals. It is fantastic to want a bigger home, new vehicles, trips, clothes, etc. The reality is that your income may not support all those things. If you want to achieve a financial goal, sacrifices need to be made. Ask yourself: Do you really need the latest phone? High end clothing? 2 brand new cars with payments? Probably not.


How do you Budget??

money management, finances, budget, money, young professionals Finances in a home can be a huge burden or point of contention for many couples. Read any newspaper that outlines divorce statistics and you will see finances being the #1 reason for marriage breakup. Money can be an extremely overwhelming subject, which is why there are so many financial professionals out there to assist on the subject.

Personally, I love budgeting. It is extremely comforting for me to “work out the numbers” for our home. Oddly, my husband is in the financial business, but he gives me the drivers seat to come up with a budget for us to review as a couple (He knows how much happiness spreadsheets and calculators bring me!). I think having a financial plan is extremely important, especially if one partner has different spending habits than the other. The budget should be reviewed and agreed to by both of you, since it is a team effort to bring in the money it should be a team effort to spend it appropriately.

Thankfully, my husband and I are on the same page for the majority of our financial decisions. I am a little more reserved and he is more of a risk taker, but we somehow manage to meet in the middle. Many of you have seen the television shows or have read Gail Vaz-Oxlande books on money management. I enjoy learning from her and find her general approach to finances very helpful.

I have been asked countless times how my husband and I budget, specifically the breakdown of where we spend our money.

The following breakdown works well for us, but your situation could be different. I recommend seeking the guidance of a financial professional to ensure you are covering all aspects for your own personal circumstances.

Our Household Budget based on Net Income:

30% – Housing (Mortgage, taxes, house insurance, utilities & hydro)

20% – Transportation (car payments, gas, repairs & vehicle insurance) *My husband travels a lot for his job

20% – Life (Groceries, eating out, entertainment, clothing, gifts, gym memberships, etc)

10%- Long term savings (retirement)

10%- Savings (Accomplish goals like house renovations, buying a second property, etc)

5%- Emergency Fund (For everything unexpected!)

5%- Treats! (Vacations, events, spa, etc)

Sit down with your partner and create goals that can be worked on together!