By Chellie Mejia, B.Sc.
Figuring out whether or not you’re ready to buy a house is a huge task; so it’s not surprising that most of the meetings I have every week are with couples and families who aren’t quite sure whether or not they should take that next big step. Whether I’m talking to renters who are aiming to make their first purchase, or home owners looking to downsize, the decision to buy is a big one to make, and not one that should be taken lightly.
What I’ve started doing to aid in that decision making process is engaging my clients in what I call a client interview. I’ve noticed that there are signs that indicate whether or not they’re ready to move forward, and things that I can do to make sure that they have the tools and the information they need to be able to make that transition.
Firstly, I look for clients who have the money together for a down payment and closing costs. I find that closing costs is something often forgotten or unknown, particularly for first time home buyers. A down payment typically ranges anywhere from 5-20 per cent of the purchase price of the property, but closing costs include things like taxes and title insurance.
I also look for clients who have some knowledge of today’s market. Sometimes that takes a little teaching on my part, but it is absolutely necessary. Know what the going rate is for houses in the neighbourhoods that you’re eyeing and have a realistic view of what type of property to expect for the money you intend to spend. It’s much less heartbreaking than finding the home of your dreams and realizing it’s $200,000 outside of your budget.
This goes hand in hand with knowing how much you can carry as a monthly mortgage payment. The general rule is that your mortgage payment be less than or equal to about 25 per cent of your gross monthly income. Clients who have a full understanding of their finances and how much they can afford to spend on their home are doing their homework.
A little prep work to make sure that their credit is in good shape is also important. Potential lenders who will be issuing mortgages will view your credit history to determine interest rates or even whether or not they’re willing to provide a loan. It costs about $30 to pull your own credit report from each of the three credit reporting companies (Equifax, Experian, and Trans Union), so really, what’s an additional hundred dollars spent if it means saving potential thousands in interest rates on a mortgaged home.
My end goal is to have clients who are excited and happy about the purchases they’ve made; so I like to make sure there are no surprises. Making sure that they’re knowledgeable about the additional expenses that come with owning a home―homeowners insurance, utility bills, maintenance costs, etc.― is essential.
All in all, figuring out whether or not a client is ready to move can be a daunting task, for me and for them! But doing the prep work and making sure that everything is lined up to make the process go as smoothly as possible can make the end result oh so blissful, and totally worth the work.