A HAPPY HOME BUYER is a financially fit home buyer, and having an expert coach to get you across the mortgage finish line is a winning strategy.
Bonnie Beckman, manager of consumer lending at Steinbach Credit Union, says a financial planner can work with you to set and achieve short- and long-term financial goals. That includes advance planning to help you pay down current debt while saving for a down payment on a home.
"Buying a house and preparing a mortgage is one of the best opportunities we have to really help our members make great financial choices, and the most important question we ask is, ‘What is your budget?’
Then we find customized solutions for our members to achieve their goals." It’s important to understand the expenses associated with buying a home. Future maintenance, monthly utility bills, insurance, taxes and upfront costs for furniture and appliances should be taken into account before you even look at a purchase price.
"Even if a mortgage payment is the same as your rent, it’s still not the same as far as house ownership goes because now your responsibilities are much greater," says Beckman. She recommends breaking down the monthly cost of home ownership, determining the difference between that and your current expenses and then trying to put that amount aside each month — both to get accustomed to a new budget and to save for a down payment. It’s important to be realistic about how much of your income you want to commit to mortgage payments.
"It’s finding that balance between how much income should go toward this home and how much you want to go towards travel or entertainment or dining out — because it really is based on lifestyle," she says. Once you have a down payment ready, it’s time to meet for preapproval and to work out a mortgage strategy that is right for you.
"One problem can come in when you tell someone the maximum amount that can be approved or the maximum amount that they could technically afford — I think it’s the wrong message to send to people," says Beckman. "In the financial industry, we have standards and we can tell people, ‘Yes, we can approve this,’ but really it’s all about their lifestyle and how much of their monthly income they want to put into their house.
"We also try to zone in on what type of property you are looking to buy and help people know that pre-approval is still dependent on the property itself." When it’s time to make the offer to purchase, Beckman cautions that it’s a good idea to make it subject to financial approval to make sure there are no surprises.
"If you just put in an unconditional offer, then you’ve bought this house no matter what," she says. "If you’re pre-approved for $500,000 and the property value isn’t quite there or there’s something really unique about it that would make it difficult to resell — that can sometimes change the picture." If you’re buying a newly constructed home, you can likely assume there will not be major maintenance issues in the short term, but with an older home there might be issues that change the road just ahead.
"It’s important to ask what work has been done or if a new water heater has a warranty, when shingles were replaced — just to help better prepare and to say, ‘Yes, based on the value of everything, this property would be a good fit.’ " Beckman says buyers should also understand all the one-time fees involved in buying a home.
"We like to talk about what your lawyer appointment is going to look like and outline all those fees when purchasing a home so there are no surprises." Finally, it’s time to talk about interest rates and whether the buyer wants to lock into a rate or choose a variable rate. Once you move in, the next leg is the homestretch — but it’s a long one. A financial planner can continue to coach you, to help you find ways to pay off the mortgage more quickly, to plan for retirement, buy a vacation home and more.
"To establish your relationship with your financial planner, it’s important at the start to go in being really honest about goals and how much you want to spend," says Beckman.
"We want to put clients in good situations so it’s not just, ‘I got what I wanted,’ but, ‘I got what I wanted and I can afford this and my life is still really exciting!"