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▶️ Watch this episode on Youtube
***
EPISODE DESCRIPTION
In this episode, Sarah is again joined by Jenna Drummond & Tegan McGinity.
Jenna is a licensed Realtor® from Calgary, Alberta, who's passion lies in helping individuals and families navigate the complexities of buying and selling homes, prioritizing trust, authenticity, and personalized service.
Tegan is an independent Canadian Financial Advisor from Winnipeg, Manitoba, who works 1-on-1 with clients to create a complete financial roadmap that is custom to them and their goals, while remaining simple and easy to follow, giving her clients mental freedom and peace of mind in their financial journey.
In part 2 of a 2 part episode, Jenna and Tegan are here to discuss:
→ Why it's crucial to prioritize an early mortgage pre-approval, the process of getting a pre-approval, and the impact of vehicle loans, debt, property tax, & condo fees on home financing.
→The unique challenges faced by self-employed individuals with mortgages, tips for self-employed financial management, and how to keep track of your credit score.
→ Smart budgeting strategies to avoid the pitfalls of being "house poor", the value of having the right experts in your corner, and what will be covered in the upcoming webinar.
Jenna Drummond's Website: www.jennadrummond.com
Jenna Drummond's Instagram: @jennaleighdrummond
Jenna Drummond's YouTube: @jennadrummond
Jenna Drummond's Email: jenna@jennadrummond.com
Tegan McGinity's Instagram: @financewithteg
Tegan McGinity's Email: tegan@financewithteg.com
***
YOUR FIRST HOME FORMULA WEBINAR
On July 30th, Sarah, Jenna, & Tegan will be co-hosting a webinar titled "Your First Home Formula", geared toward first-time homebuyers. This is your chance to get expert advice from experienced professionals in real estate, mortgages, and finances. Whether you’re just starting your journey or seriously considering making your first purchase, this event will provide you with the tools and insights you need to make your homeownership dreams a reality.
For more information and to sign-up to attend, visit: @YourFirstHomeFormula
***
CONNECT WITH THE SHOW
🎙️ Alberta Bound Podcast: Alberta Bound: Building Wealth Through Real Estate (in Alberta)
📺 Alberta Bound YouTube: @AlbertaBound-Broker
***
CONNECT WITH SARAH
📸 Sarah Hainsworth's Instagram: @emeraldmortgages
👥 Sarah Hainsworth's Facebook: @SarahHainsworth
📋 Sarah Hainsworth's LinkedIn: @SarahHainsworth
🔗 Emerald Mortgages Website: www.emeraldmortgages.ca
***
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to the Alberta Boundpodcast.
(00:01):
I'm your host, Sarah Hainsworth,mortgage broker and entrepreneur
based out of Alberta.
Today I have the pleasure of
speaking to...
Jenna Drummond, a realtor in
Calgary, Alberta, and my friendTegan McGinnity, a financial
advisor.
We are going to chat about all
things when it comes to purchasingyour first home.
(00:23):
This is a second of a two -partepisode with Tegan and Jenna.
So make sure you listened to partone from last week.
And a reminder that Tegan, Jenna,and myself will also be hosting a
free online event.
this coming Wednesday, July 30th,
titled Your First Home Formula.
So if you're ready to take the
(00:45):
leap into home ownership, we'regoing to provide you with the
tools and insights that you needto succeed.
To find out more information andto sign up, check out the Your
First Home Formula link in theshow notes.
I think we should maybe just talkabout the pre -approval process.
Say somebody's ready to purchasetheir first home.
What does that look like?What do they need to have prepared
(01:08):
to meet with you?Okay, so let's talk about pre
-approval.
pre -approval.
So number one, the first thingthat you want to do is talk to a
mortgage broker.
I mean, you can talk to your bank,
but mortgage brokers definitelywork with banks.
And so I would suggest talking toa broker.
It doesn't always add up.
when a client thinks that they're
able to qualify for a mortgagebased on their income.
(01:28):
Because on our side, there's a lotof different calculations that go
into it.
So it's not just, yeah, you made X
amount of dollars.
You know, you have this truck
payment that's eating up $1 ,000of your purchasing power.
On top of that, you've got studentloans, which is also something
people don't really consider.
And when you're... debt servicing
a student loan even if it's in non-repayment so your payment is zero
(01:51):
we have to debt service it atgenerally 1 .5 percent so if you
have a substantial student loanyeah you might not be in repayment
but we still have to account forthat payment because it will come
up at some point so pre -approvalfirst thing talk to a mortgage
broker who can set you on theright path because There's a few
(02:11):
different things that go into it,so ratios, but sometimes things
pop up on credit that you may noteven know about.
And so I work with some creditspecialists who can help.
Let's say there's an error on anEquifax report where there maybe
was a mispayment or there wassomething that was on there that
shouldn't be.
They can hop in, they can get that
(02:32):
sorted before we go to submit toany lender.
If you go backwards and you goshop for a house, number one, you
don't know how much you canafford.
So you are going to end uppotentially being disappointed.
And number two, if anything comesup that would stop you from
purchasing that home, let's saythere is a blip on the credit
profile and it's something thatyou didn't even know was there.
Well, now you've got your offer inand you really had no business
(02:55):
being out there shopping anyways.
And we don't have the time to
correct that in order to make yourcondition of finance, let's say.
So the first step is getting pre-approved.
And it doesn't mean that you haveto buy right now, but at least you
know what you could potentiallybuy for.
Or we can set you up for the stepsto be able to buy.
And that's where Tegan, you comein, right?
So yeah, feeding off of that, doyou have a recommendation at
(03:17):
like... how far in advancesomebody should be reaching out to
you to start the process to figureout what they could get approved
for, or if they, you know, maybebased off their income, they could
get approved for this, but theirassets and liabilities aren't
there yet to then figure out,okay, well, I need to save this
much, or I need to pay down thisdebt.
Like at what point does it makesense to meet with you, start the
(03:38):
process, and then maybe meet withsomebody like me.
to get their ducks in a row sothat they're successful when
they're actually house hunting andable to put an offer in.
Yeah, I mean, I would say rightaway, if you're thinking about
buying a home, you have moreoptions than you think.
A lot of people don't really knowabout gifted down payment that,
you know, if your parents arewilling or if they're able or
somebody can help you get into thehome.
I mean, that's step one.
Or we can set you up, yeah, with
(03:59):
Teagan, who can show you budgetingtools that can help you save each
month and then best practice whenit comes to tax time, right?
And saving that way.
And co -signers, co -signers,
right?Like I think so many people don't
know about the option of co-signers.
So having that conversation withyou and like what would need to be
done is really helpful, again,just to know when you're getting
(04:20):
started.
Sarah, do you want to touch on
what documents are required forpre -approval?
Like obviously it's a littledaunting when your mortgage broker
sends you the list of all thethings that you need to send over.
So like maybe you could touch onwhat some of those things are like
obviously having your taxesprepared, but I know it's more
than that.
Like Yeah.
So when it comes to your pre-approval.
We underwrite your file fully inthe background, and that means we
(04:42):
need two pieces of ID.
We're going to check your credit.
We're going to look at your incomeand any liabilities that you have.
When it comes to income, the waythat we structure it can vary on
your situation.
So let's say that you are a T
-Ford employee.
and you have worked at the same
job for five years.
Well, that's easy.
We can just use your letter ofemployment.
We can use your pay sub and a T4to qualify your income.
(05:04):
But let's say that you are also aT4 employee, but you work in the
oil field.
And let's say you run equipment.
Well, you might run equipmentevery time you're at a job.
But your employer changes.
So sometimes you'll have like 10
employers in one year and peoplethink that because they haven't
worked for the same employer for10 years and they have.
10 employers per year that they'renot able to use that income.
(05:27):
And that's not true.
For that situation, we would use
an average of the two years ofincome.
And depending on the lender,sometimes let's say there was a
slower year, we can use a rollingaverage.
So we can use a 24 -month average.
Because I mean, in oil fields,
sometimes there's lows and there'shighs and there's times where
(05:49):
you're making more money.
But when we're asking for the
documents, it's not to be like apain in your butt.
It's because we want to make surethat we're providing you with all
of your options.
And the only way we can do that is
by having all of the information.
So yeah, documentation can be a
bit tedious, especially with downpayment, like I mentioned, and
(06:09):
with income.
Usually we can knock it out pretty
seamlessly.
seamlessly.
And if you're self -employed, youwould just provide like two years
of your tax statements?So if you're self -employed or
business for self, -employed orbusiness for self, it depends.
Like if somebody is soleproprietor, we're able to use
their taxable income and thenactually gross it up about 15%.
So that's helpful when we go theincorporated route.
(06:30):
That's when it's really importantto work with an accountant because
sometimes, you know, I mean, it istheir job to write everything off
so we pay the least amount oftaxes.
But sometimes if we can have aconversation with the accountant
prior to them filing and say, hey,you know what?
Let's not write off as much thisyear.
(06:52):
Let's bump up the income so thatwe can get AAA lending and save
the client interest.
And then we'll bump it back down
once they have the mortgage.
So when it comes to self
-employment.
There are a lot more documents
that go into it.
So we need your T1 generals.
We need your notice of assessment.
(07:15):
We need your articles of
incorporation.
Sometimes we need your business
bank statements because there areprograms that allow us to use what
the business has made rather thanwhat you've claimed.
It is tailored to the client.
That's why it's really important
for us to have those conversationsso that we know what's the best
way we're going to qualify for themortgage and how we're going to do
that.
Now, for somebody who's
incorporated, does it make adifference on their approval if
(07:37):
they're paying themselves a salaryversus a dividend?
Not exactly.
No, we just need to have a steady
history of the dividend income.
Salary income is very easy to
prove, but dividends fluctuate.
So as long as we have a history of
it, then we can use that.
And if you're incorporated and
you're just a sole owner, you'rethe only one working in that
(07:57):
business or even not, can youtechnically also use the business
income to increase what you couldget approved for?
Because even if, you know, maybeyou've only paid yourself X amount
of dividends, but there is extracash flow that you could pay
yourself in theory.
could the corporate financials
increase what you could getapproved for personally?
Yeah.
Sometimes they want to see the
backing of the corp.
(08:18):
Sometimes they don't.
It really depends on the lenderand the situation.
But yeah, there's definitely waysto leverage the business income
depending on the client.
Okay.
Yeah.
Self -employed is by far my
favorite type of clients to workwith, but it is tedious, right?
We're all self -employed.
I know you guys are all out there.
I think there's a different levelof I guess, understanding or
(08:40):
motive.
I don't know what you want to call
it, but there's a different levelof thinking that goes when you're
business for self, right?Like you kind of think outside of
the box.
So those are my favorite mortgages
to do.
When you're having your own
business, you're having your ownbusiness, you have to be more open
-minded to different things.
And you're probably, I mean,
depending on the person, you mightbe a bit more conscious on your
(09:04):
financials too, right?Because.
you don't have a steady paycheckcoming in.
So you have to be a bit more on itand like aware of everything and
be open to ways to maximize yourability to get a house.
So yeah, exactly.
Tegan, do you have any suggestions
or tips for people who are self-employed?
Obviously it's really complicatedand it's going to depend on like
(09:25):
everybody's personal situation,but like my sister just became
self -employed.
She's got a, like a marketing.
company so like for somebody who'sjust starting out what would you
suggest in terms of like budgetingand saving and like what should
that look like So it's going to bevery important to track things on
a monthly basis, especially ifyour income fluctuates a lot.
Like you guys, your incomefluctuates, mine fluctuates.
And so like you can get an idea ofa baseline if you know like, okay,
(09:45):
what are my monthly bills andexpenses?
How much on average do I typicallyspend?
Maybe like, you know, going out,whatever it is.
And that's going to give you abaseline of how much money you
need to make to be able to dothose things.
But you can also reverse engineerin the sense of like, okay, well,
how much do I need to save forretirement?
(10:06):
I need to save for a house basedoff of those goals.
And then, of course, I willincrease that baseline.
And if you are expecting to make,you know, X amount per month,
that's great.
You can set up automations into
savings accounts, whether it'syour emergency fund or your house
savings.
But it is also important to track
it because let's say you have ahigh month.
(10:27):
Right.
And if you're not really paying
attention and you're like, oh, Ijust have all this extra cash,
you're probably just going tospend it.
Right.
But when your income fluctuates.
Just like there's high, there'sgoing to be lows too, right?
And so you have to make sure youactually, you know, outside of
your automations, you canmanually, you know, set that
excess aside and maybe like anincome buffer.
That way, if you do have a lowmonth, you can make sure you have
the money there to make sureyou're still making those auto
deposits, right?Or sometimes people have your
(10:48):
income fluctuates a lot or justbecame self -employed and you
don't feel comfortable setting upautomations because your income is
not as secure.
that's fine, right?
But at least if you're tracking itevery month, you have more of the
reminder to make manual deposits.
Because if you're not looking at
it, you're not tracking it, you'renot going to know how much you
have left over.
And you're probably not thinking
about going and pressing transferevery single month.
(11:09):
So yeah, I would say budgeting,keep on it.
Set up automations if you can.
And if not... make sure you're
reminding yourself to set thatmoney aside.
Cool.
So can you talk a bit about
actually acquiring debt, maybebuying a vehicle or anything, how
that can affect your ability toget approved if you do that right
before you get a mortgage?Yeah.
So I would say get the housefirst, because once you have the
house, they're going to offer youthe world when it comes to
(11:33):
vehicles.
When you go the opposite way, you
know, you secure the vehicle.
And I mean, generally, it's pretty
easy to get approved for a loanfor a vehicle.
But now that liability eats upyour purchasing power.
So the ratios will go downsubstantially.
I definitely should have thenumbers on this, but it is huge.
And so if you can, I would waituntil you have a house to finance
a vehicle.
(11:53):
vehicle.
Right.
Especially now with like vehicle
loans in general, if somebodyalready has one, I'm seeing like
just the clients that are comingto me, people who have acquired a
vehicle loan in the last fewyears, you know, vehicle loans
that you get at like four or five,6%, they're now paying like 10 to
12%.
In your experience, maybe from
(12:13):
what you've looked at, does inthat sense, even though you'd be
dragging out the loan.
In that case, would you recommend
rolling that vehicle loan into themortgage if it's at a lower
interest rate?So you could do that if you're
doing a refinance, you could dothat if you're doing a refinance,
but on the purchasing side, youcan't include anything outside of
the home.
I have a partner that I work with
and he does some pretty coolthings with financing vehicles.
(12:37):
And so let's say you own a companyand you have a vehicle personally.
You can actually sell it to thecompany and now it's in the corp.
So it doesn't report on yourpersonal profile.
There's also ways to stretch outyour amortization.
So if you bought the vehicle andit's a newer vehicle, but you
shortened it, your payments arehigher.
They're able to stretch that out,lower the monthly payment, and
(12:58):
then give you access to morepurchasing power.
So they can do that with boats.
They can do that with trailers.
So there's a lot of options.
And I think some people don't know
that.
Like you wouldn't really think
about that, but it is somethingthat can help.
Because if you are stuck with thisvehicle payment, I mean, you can't
really get rid of it.
You just have to work with it and
(13:19):
try to fit the numbers in thatway.
So I guess there's that guy, Iguess there's that guy, in a
sense, he's kind of like a vehicleor... asset financing broker in
the sense where like, let's say ifyou went to just like a car
dealership, they're just going togive you whatever the lending
options that they get, like withthe institutions.
Whereas this guy maybe has moreflexibility for that loan for you.
you Yeah, he's definitely afinance guy.
(13:39):
I don't know how he does hismagic, but he does it.
And he's a great asset to mybusiness.
So I love working with him.
The other thing he can do is he
can pull equity out of thosevehicles.
And I don't know, they kind ofcracked down on it a little bit
now, but you were able to pullequity.
out of those assets and use it fora down payment.
(14:01):
That's crazy.
I've never heard of that.
I've heard of stuff like thatbefore, but I wasn't sure on the
rules because, well, let's say,you know, there was a point, maybe
you can still do it now, but youcould get like a brand new vehicle
at 0 % interest, right?And so if you could leverage what
you've paid off there and use thatdebt, I don't know if you'd be
able to keep the 0 % interest orif you'd have to increase it.
But yeah, like kind of refinancingor pulling that equity up to then
(14:24):
put it somewhere else.
It would be similar to like a
refinance in a car where theywould pull the equity and then
your interest rate would go up forsure.
But maybe it would be lower thanjust like a standard loan or line
of credit card because there's anactual app to it, maybe it would
be lower than just like a standardloan or line of credit card
because there's an actual app toit, potentially.
I have a really random questionabout condo fees.
Going back to say somebody is afirst -time homebuyer, we were
(14:45):
talking about like what theprocess is, like what the pre
-approval looks like.
If somebody was purchasing a
condo, how did the condo feesimpact what they can qualify for?
Well, they go directly against theratio.
So if let's say it's 350, thenthat takes away from their monthly
amount that they're able toqualify for.
So there is a huge fluctuationwhen it comes to condo fees,
because it's not just condo fees,it's property taxes.
So both of those have to worktogether.
(15:06):
Well, they have to fit within theratios, right?
That sometimes is tricky becausecondo fees have gone up a lot.
Like I say 350, but that's like,that's really light these days.
That's really light.
Yeah.
Well, and the other thing is ifcondo fees are including heat,
right?Because people don't know that we
also have to debt service heat,which is actually a huge expense,
which we don't debt serviceproperly.
I think in general, we do about$100 a month.
(15:26):
But like, I know that my heat billis a lot more than that,
especially in the winter.
Yeah.
Sarah with credit, do you have anysuggestions?
Like I know some banks offer it,like just when you log into your
banking portal, they might saylike what your approximate credit
is, but are you familiar with anyplatforms or online websites or
anything where people can checktheir credit for free?
Yes, so I do suggest that clientsdownload BorrowWell, which reports
Equifax, and then Credit Karmareports TransUnion.
And usually between the two ofthose, you can get a pretty good
(15:48):
idea of where you're sitting.
Now, I want to preface that with
they are a marketing... company.
Both of them are.
So you're going to go on andthey're going to offer you the
world.
And I don't suggest that you take
it because there'll be a, you'repre -approved, you're pre
-approved, right?And sometimes that can just lead
you down the wrong path.
What I do suggest is there is a
(16:11):
rule of thumb we use.
It's two, two, two.
So lenders want two years ofhistory on two trade lines for $2
,000 or more.
And that's going to give you the,
I guess, backing in order to get amortgage so if you have clean
repayment history two yearsminimum yeah and two trade lines
can be a credit card it can be aline of credit we do use cell
(16:32):
phones they're not generally usedbut borrow well does have a
program right now where you canrecord your rents i believe which
can act towards your credit scorebecause i mean there's a lot of
people out there that are rentingand they've been renting for years
but they're not getting thebenefit of seeing that on -time
payment each month just becauseit's not recorded so that's
another way to help build creditin the background i've seen
(16:55):
different programs where you maybepay a subscription or they pay
your rent for you in that sense soyou pay them they report that
payment and then they pay themortgage but jenna where you maybe
pay a subscription or they payyour rent for you in that sense so
you pay them they report thatpayment and then they pay the
(17:17):
mortgage but jenna Like obviouslywith Sarah, okay, as soon as
possible, we should get that pre-approval to figure out how much
we can afford.
But Jenna, how soon do you
recommend actually starting thehouse hunting process?
Because I know some people arelooking and they're kind of
keeping their eye out and they'relike, okay, yeah, if something
comes up, I'll get it, but I mightnot buy for five years.
So I've heard of some realtors whowill maybe put you on an email
(17:41):
list where you can like send themdeals and stuff.
But yeah, like, so how soon in theprocess do you recommend somebody
actually reaching out to you too?start that process?
Well, it depends.
Sometimes they'll go to the
mortgage broker first, likesomebody like Sarah, obviously to
start that pre -approvalconversation, which that is the
first step.
Then you should come to me, but
(18:03):
often they might come to me andthen I recommend somebody like
Sarah.
And then we kind of figure out,
okay, great.
What's the timeline from there?
It's so hard.
I work with some clients where I
show them one house and that's,you know, they found the perfect
one.
Often it takes more time than
that.
So I have a lot of clients who are
(18:24):
sort of, I don't know, likesometimes six to 12 months out,
they just want to start receivinglistings, they want to know an
idea of, you know, if their budgetis 500 ,000, you know, what does
that look like?What are their options?
What areas can they purchase in?So just to start receiving some
listings and kind of dip theirtoes into it a little bit.
I have a lot of clients who dothat.
But I have other clients where Youknow, we don't really start the
process until they're like, yep,say like their rental is coming up
and their lease is ending in threemonths.
(18:46):
We start looking right away and weknow that we have a little bit of
a time crunch.
So it just depends on everybody's
situation.
But typically, I mean, like you
don't really start doing showingsof properties until you're
probably a little bit more seriousand ready to like make that next
step.
I mean, there's like open houses,
you know, show homes, like there'slots of things that you could do
when you're sort of in thestarting phase to figure out what
you want and where you want to be.
(19:07):
So yeah, I think everybody's just
a little bit different.
But if you are interested in
receiving those like listingnotifications, most of the time it
is like set it and forget it typeof email notification.
So it's not like it's extra workfor your realtor.
It's really easy to set up andchange the parameters if something
changes down the road.
So that certainly can't hurt just
to... see what's out there.
That's super interesting because I
do have clients who, superinteresting because I do have
(19:30):
clients who, you know, they wantto buy a house at some point, but
they have no idea what themortgage amount would be, right?
Whether it's based off of whatthey get approved for or based off
of what they're looking for,right?
And then I'm like, well, I don'tknow how much we should start
saving because, well, I don't knowwhat your goal is.
And so then we just start savingto save.
But it's interesting to know thatthese people, even if they're not
(19:51):
ready to buy right away, they canstill start the process so we can
at least get an idea of.
how much we should be setting
aside because, you know, maybe wecould save a little bit less based
off the timeframe, then maybe youhave a bit more money to enjoy or
go on that trip while saving for ahouse.
So yeah, it's nice to know thatpeople can kind of get started.
And what type of offerings do youhave?
Like when somebody wants to workwith you, like, what does that
(20:14):
look like?What are their options?
Right.
So I like to look at the full
picture.
I always like to even just use a
house as a reference, right?You need to make sure your
foundation is solid and secure.
That way, everything you're
working towards doesn't just comecrumbling down, right?
So We usually start with thebudget, right?
We break it down.
We see, okay, how much money do
you have coming in?How much money do you have left
(20:35):
over?And then we can make a plan for
that money.
But before we can make a plan for
that money, we need to make surethat your income is secure, right?
Because, you know, if you can'twork or you're in the hospital or
whatever it is, and you don't haveany income protection.
You can't really keep saving andinvesting in that time frame to
your goals is just going to beextended.
So we need to make sure yourincome is protected.
That way, if anything happens toyou, you can keep saving.
(20:57):
And then from there, right, thenwe can also look at if you do have
any debts, we can put together astrategy to.
you know, figure out when thatdebt can be paid off, right?
We can look to see if there's anyways to minimize your interest
paid off sooner.
But basically, right, you really
want to tackle that debt, maybebefore you start saving and
investing, really depending onwhat that interest rate is,
because there's no point innecessarily saving and getting
(21:17):
maybe like a 2 % high interestwhen you're paying 10 to 20 % in
interest in debt, right?So debt really needs to come
first.
And then once we have a handle on
that, then we can look at yoursavings.
So that could be building anemergency fund, income buffer, you
know, saving for fun things liketravel, right?
Making sure those are set up tohit those goals.
And then from there comes yourinvesting, right?
Because if you just jump toinvesting without doing any of
these things first, If you loseyour income, you drain those
investments.
(21:37):
If an emergency comes up and you
have no money set aside in yoursavings and the market's down,
well, you don't want to pull thatmoney out when it's down.
We see the market goes up and downall the time.
And so before you even startinvesting, it is really important
to have that nest egg so that ifsomething happens, you have the
money set aside.
And then you can wait for your
investments to recover if youdidn't want to take it out.
But yeah, basically that kind ofsums it up, right?
(21:58):
Starting from the ground, workingour way up to make sure that, you
know, if anything happens, there'sa 99 % chance you will still be
able to hit your goals.
I wanted to talk a little bit on
the budgeting side that I do in myprocess.
wanted to talk a little bit on thebudgeting side that I do in my
process.
So when you're saying we don't
know what they can actually affordlike monthly, that is something
(22:19):
that we go into when we're doingthe pre -approval.
I don't ever want a client to behouse poor.
I know that that happens so often.
And so we do look at, hey, are you
renting right now?How much is your rent?
Are you comfortable in that area?Or is there some room?
And so that's something that welook at seriously.
When I bought or me and my husbandbought our first home, we didn't
take into account the propertytaxes.
(22:40):
which if you know anything aboutAlberta, like they're pretty big
here.
And so that was an expense that we
didn't account for.
And it did leave us a little bit
light at the end of the month, youcould say, especially year over
year with that increase.
Definitely knowing what you're
comfortable spending each month onyour property taxes and your
mortgage is a big part of theprocess.
Oh, I totally agree.
And I really appreciate, Sarah,
(23:01):
when you work with my clients thatlike you're not stretching their
budget to the very end, you know,just being very realistic with
trying to stay with what they'recomfortable with.
Because I think there's a lot ofbrokers who just say, oh, yeah,
like this is your max.
Like, you know, go for it.
You can afford 700, you know, andthey don't really break down what
that actually means.
in terms of the monthly payments
(23:21):
and everything outside of themortgage.
So I really appreciate that.
I just wanted to let you know.
Oh, good.
I just wanted to let you know.
Oh, good.
Yeah, no. And that's the thing is
I learned from my own experiencethat that was important because we
told our broker at the time, well,banker, we said, hey, we're
comfortable at $2 ,500 a month.
And that was our cap.
We didn't think about anything ontop of that.
And so then when our bills arecoming in and we're like closer to
(23:42):
$4 ,000 a month, it was tight.
I never want that to happen to
anybody else.
Do you have a purchase calculator?
Like, you know, purchase price isthis, so your monthly payments are
this, but then your condo fees andyour property taxes and like all
of those things are kind of in onespot.
Yeah.
So when I do my pre -approval, I
actually go through that in areally detailed spreadsheet for
clients and we break it down sothat they can see, they can see
(24:03):
what their maximum is.
And then we can also run numbers
on potential properties.
So if they're interested and
they're saying, Hey, you know,this one, this looks.
a little bit out of reach for uscan you just run the numbers and
see what that looks like monthlyand then sometimes you know that
can be the deciding factor for aclient saying hey we're willing to
pay the extra however much a monthor they're like no you know what
(24:27):
that's out of our budget we can'tmake that work and so I think it's
really important to be detailed inthat part of the transaction so I
totally agree like there's so manydifferent dynamics too especially
with my clients and I'm looking atthe budgets it's like okay well if
you have kids totally agree likethere's so many different dynamics
(24:48):
too especially with my clients andI'm looking at the budgets it's
like okay well if you have kidsyou're probably spending a lot
more money, right?And so that's going to eat up a
lot of that affordability.
This is in the house related by a
client once.
And she's like, you know, I want
to buy a, you know, Toyota4Runner.
You know, I really want to buythis vehicle.
And I said, okay, well, let's takea step back and put that into your
budget and see what that actuallylooks like.
And yeah, for her, it was like,okay, do I... care enough about
(25:09):
this vehicle to lose my purchasingpower on a monthly basis or am I
okay not downgrading but going forsomething a bit more expensive
that still makes you happy just sothat you can enjoy your day -to
-day a bit more and yeah so I feellike that's really important with
a mortgage because okay maybe youcan get approved for x amount of a
mortgage but do you really wantthat bill yeah so yeah it's all
(25:30):
about yeah the person what theiractual expenses are and how it
fits yeah well i think just it'shard because we don't want to do
that stuff we don't want to getinto the like how much am i
spending each month on like eatingout right but i think the first
step is being aware of what yourexpenses are and then you can work
your life around that just it'shard because we don't want to do
(25:53):
that stuff we don't want to getinto the like how much am i
spending each month on like eatingout right but i think the first
step is being aware of what yourexpenses are and then you can work
your life around that Exactly.
Yeah, you don't always have to
sacrifice the fun things.
You can just maybe not get the
most expensive thing over here,right?
So that's the board world.
It's all about balance.
(26:13):
Okay, so let's talk a little bitabout our webinar.
So we're hosting a webinar onWednesday, July 30th, where we're
going to dive into first -timehomebuyers and the whole process.
So as a financial advisor, as afinancial advisor, right, I help a
lot with the budgeting, saving,investing, you know, saving the
money for the actual down.
So I'm going to be talking a lot
about, you know, setting yourselfup for success in that area and
making sure you're using the rightaccounts to your advantage.
There's also going to be some hotlittle tips and tricks that a lot
of people don't know that can helpbenefit you when it comes to
saving in like an FHSA or an RRSPwhere, you know, there could be a
(26:37):
situation where you think it's toolate.
But there's little tips andtricks.
If you're working with the rightperson, they can get you the right
strategy.
the right strategy.
And on the real estate side ofthings, we're just going to do
like a whole overview of whatevery step looks like.
Because I mean, just likeinvesting or mortgages, nobody
teaches you this stuff.
You don't learn these things in
school.
And I just think it's really
(26:58):
important to have.
at least a basic overview of what
does an offer actually look like?What does showings look like?
You know, like, how does it workwhen the realtor just like books a
showing?What does that even mean?
And then the entire offer process,like I'm sure if you're thinking
about buying a home, you'veprobably heard at some point, the
term condition, you know, like acondition on an offer, what does
that look like?So we'll just take everything step
(27:20):
by step and just chat a little bitabout what the home buying process
as a whole looks like.
And then on the mortgage side of
things, I'm going to talk aboutgovernment programs that are
accessible to first -timehomebuyers.
What does it look like to get apre -approval?
And then a lot of...
What I want to talk about is
having the right team behind youto support you through the
journey.
Because being a first -time
homebuyer, it can be scary.
It can be nerve -wracking.
And you want to make sure that youare surrounded with support and
people that can help you reachyour goal.
Jenna, if clients are looking toreach out to you, how can they
find you?Yes.
Okay.
So my website is www
jennadrummond .com.
(27:40):
A little caveat, I am getting
married in September.
So my last name is changing.
So if you're listening to thispodcast.
After September, my new website isgoing to be www
jennabole .com.
And my Instagram is Jenna Lee
Drummond.
And my YouTube, I also have a
YouTube account.
It's also just Jenna Drummond.
That will change.
Stay tuned.
But yeah, those are primarily theways that you can get a hold of
(28:03):
me.
Cool.
And what about you, Tegan?If somebody is looking to get
started in the budgeting processor just even talk to a financial
advisor, how can they find you?Yeah.
So I do a lot of my marketingthrough Instagram.
So my handle is at financialfatigue.
I kind of did that on purposebecause I also, my last name will
be changing at some point.
So this way I'll say the same, but
yeah, at finance with Teague,that's where you can contact me
through Instagram.
You can also email me.
It's just my first name, Teagan atfinancewithteague .com.
(28:26):
So super easy.
And then yeah, you can set up a
meeting.
I do also have a link in my bio on
Instagram.
So if you just want to go in there
and book a free initialconsultation, just to kind of get
an idea of like.
how my services work, how they
would apply to you and maybe getsome questions answered.
You can always use the link onthere.
(28:46):
It's pretty easy.
Okay, perfect.
So I am looking forward to seeingyou guys at our first time home
buyer webinar, and we will includesome details for that if anybody
wants to attend.
Welcome to the Alberta Boundpodcast.
(00:01):
I'm your host, Sarah Hainsworth,mortgage broker and entrepreneur
based out of Alberta.
Today I have the pleasure of
speaking to...
Jenna Drummond, a realtor in
Calgary, Alberta, and my friendTegan McGinnity, a financial
advisor.
We are going to chat about all
things when it comes to purchasingyour first home.
(00:23):
This is a second of a two -partepisode with Tegan and Jenna.
So make sure you listened to partone from last week.
And a reminder that Tegan, Jenna,and myself will also be hosting a
free online event.
this coming Wednesday, July 30th,
titled Your First Home Formula.
So if you're ready to take the
(00:45):
leap into home ownership, we'regoing to provide you with the
tools and insights that you needto succeed.
To find out more information andto sign up, check out the Your
First Home Formula link in theshow notes.
I think we should maybe just talkabout the pre -approval process.
Say somebody's ready to purchasetheir first home.
What does that look like?What do they need to have prepared
(01:08):
to meet with you?Okay, so let's talk about pre
-approval.
pre -approval.
So number one, the first thingthat you want to do is talk to a
mortgage broker.
I mean, you can talk to your bank,
but mortgage brokers definitelywork with banks.
And so I would suggest talking toa broker.
It doesn't always add up.
when a client thinks that they're
able to qualify for a mortgagebased on their income.
(01:28):
Because on our side, there's a lotof different calculations that go
into it.
So it's not just, yeah, you made X
amount of dollars.
You know, you have this truck
payment that's eating up $1 ,000of your purchasing power.
On top of that, you've got studentloans, which is also something
people don't really consider.
And when you're... debt servicing
a student loan even if it's in non-repayment so your payment is zero
(01:51):
we have to debt service it atgenerally 1 .5 percent so if you
have a substantial student loanyeah you might not be in repayment
but we still have to account forthat payment because it will come
up at some point so pre -approvalfirst thing talk to a mortgage
broker who can set you on theright path because There's a few
(02:11):
different things that go into it,so ratios, but sometimes things
pop up on credit that you may noteven know about.
And so I work with some creditspecialists who can help.
Let's say there's an error on anEquifax report where there maybe
was a mispayment or there wassomething that was on there that
shouldn't be.
They can hop in, they can get that
(02:32):
sorted before we go to submit toany lender.
If you go backwards and you goshop for a house, number one, you
don't know how much you canafford.
So you are going to end uppotentially being disappointed.
And number two, if anything comesup that would stop you from
purchasing that home, let's saythere is a blip on the credit
profile and it's something thatyou didn't even know was there.
Well, now you've got your offer inand you really had no business
(02:55):
being out there shopping anyways.
And we don't have the time to
correct that in order to make yourcondition of finance, let's say.
So the first step is getting pre-approved.
And it doesn't mean that you haveto buy right now, but at least you
know what you could potentiallybuy for.
Or we can set you up for the stepsto be able to buy.
And that's where Tegan, you comein, right?
So yeah, feeding off of that, doyou have a recommendation at
(03:17):
like... how far in advancesomebody should be reaching out to
you to start the process to figureout what they could get approved
for, or if they, you know, maybebased off their income, they could
get approved for this, but theirassets and liabilities aren't
there yet to then figure out,okay, well, I need to save this
much, or I need to pay down thisdebt.
Like at what point does it makesense to meet with you, start the
(03:38):
process, and then maybe meet withsomebody like me.
to get their ducks in a row sothat they're successful when
they're actually house hunting andable to put an offer in.
Yeah, I mean, I would say rightaway, if you're thinking about
buying a home, you have moreoptions than you think.
A lot of people don't really knowabout gifted down payment that,
you know, if your parents arewilling or if they're able or
somebody can help you get into thehome.
I mean, that's step one.
Or we can set you up, yeah, with
(03:59):
Teagan, who can show you budgetingtools that can help you save each
month and then best practice whenit comes to tax time, right?
And saving that way.
And co -signers, co -signers,
right?Like I think so many people don't
know about the option of co-signers.
So having that conversation withyou and like what would need to be
done is really helpful, again,just to know when you're getting
(04:20):
started.
Sarah, do you want to touch on
what documents are required forpre -approval?
Like obviously it's a littledaunting when your mortgage broker
sends you the list of all thethings that you need to send over.
So like maybe you could touch onwhat some of those things are like
obviously having your taxesprepared, but I know it's more
than that.
Like Yeah.
So when it comes to your pre-approval.
We underwrite your file fully inthe background, and that means we
(04:42):
need two pieces of ID.
We're going to check your credit.
We're going to look at your incomeand any liabilities that you have.
When it comes to income, the waythat we structure it can vary on
your situation.
So let's say that you are a T
-Ford employee.
and you have worked at the same
job for five years.
Well, that's easy.
We can just use your letter ofemployment.
We can use your pay sub and a T4to qualify your income.
(05:04):
But let's say that you are also aT4 employee, but you work in the
oil field.
And let's say you run equipment.
Well, you might run equipmentevery time you're at a job.
But your employer changes.
So sometimes you'll have like 10
employers in one year and peoplethink that because they haven't
worked for the same employer for10 years and they have.
10 employers per year that they'renot able to use that income.
(05:27):
And that's not true.
For that situation, we would use
an average of the two years ofincome.
And depending on the lender,sometimes let's say there was a
slower year, we can use a rollingaverage.
So we can use a 24 -month average.
Because I mean, in oil fields,
sometimes there's lows and there'shighs and there's times where
(05:49):
you're making more money.
But when we're asking for the
documents, it's not to be like apain in your butt.
It's because we want to make surethat we're providing you with all
of your options.
And the only way we can do that is
by having all of the information.
So yeah, documentation can be a
bit tedious, especially with downpayment, like I mentioned, and
(06:09):
with income.
Usually we can knock it out pretty
seamlessly.
seamlessly.
And if you're self -employed, youwould just provide like two years
of your tax statements?So if you're self -employed or
business for self, -employed orbusiness for self, it depends.
Like if somebody is soleproprietor, we're able to use
their taxable income and thenactually gross it up about 15%.
So that's helpful when we go theincorporated route.
(06:30):
That's when it's really importantto work with an accountant because
sometimes, you know, I mean, it istheir job to write everything off
so we pay the least amount oftaxes.
But sometimes if we can have aconversation with the accountant
prior to them filing and say, hey,you know what?
Let's not write off as much thisyear.
(06:52):
Let's bump up the income so thatwe can get AAA lending and save
the client interest.
And then we'll bump it back down
once they have the mortgage.
So when it comes to self
-employment.
There are a lot more documents
that go into it.
So we need your T1 generals.
We need your notice of assessment.
(07:15):
We need your articles of
incorporation.
Sometimes we need your business
bank statements because there areprograms that allow us to use what
the business has made rather thanwhat you've claimed.
It is tailored to the client.
That's why it's really important
for us to have those conversationsso that we know what's the best
way we're going to qualify for themortgage and how we're going to do
that.
Now, for somebody who's
incorporated, does it make adifference on their approval if
(07:37):
they're paying themselves a salaryversus a dividend?
Not exactly.
No, we just need to have a steady
history of the dividend income.
Salary income is very easy to
prove, but dividends fluctuate.
So as long as we have a history of
it, then we can use that.
And if you're incorporated and
you're just a sole owner, you'rethe only one working in that
(07:57):
business or even not, can youtechnically also use the business
income to increase what you couldget approved for?
Because even if, you know, maybeyou've only paid yourself X amount
of dividends, but there is extracash flow that you could pay
yourself in theory.
could the corporate financials
increase what you could getapproved for personally?
Yeah.
Sometimes they want to see the
backing of the corp.
(08:18):
Sometimes they don't.
It really depends on the lenderand the situation.
But yeah, there's definitely waysto leverage the business income
depending on the client.
Okay.
Yeah.
Self -employed is by far my
favorite type of clients to workwith, but it is tedious, right?
We're all self -employed.
I know you guys are all out there.
I think there's a different levelof I guess, understanding or
(08:40):
motive.
I don't know what you want to call
it, but there's a different levelof thinking that goes when you're
business for self, right?Like you kind of think outside of
the box.
So those are my favorite mortgages
to do.
When you're having your own
business, you're having your ownbusiness, you have to be more open
-minded to different things.
And you're probably, I mean,
depending on the person, you mightbe a bit more conscious on your
(09:04):
financials too, right?Because.
you don't have a steady paycheckcoming in.
So you have to be a bit more on itand like aware of everything and
be open to ways to maximize yourability to get a house.
So yeah, exactly.
Tegan, do you have any suggestions
or tips for people who are self-employed?
Obviously it's really complicatedand it's going to depend on like
(09:25):
everybody's personal situation,but like my sister just became
self -employed.
She's got a, like a marketing.
company so like for somebody who'sjust starting out what would you
suggest in terms of like budgetingand saving and like what should
that look like So it's going to bevery important to track things on
a monthly basis, especially ifyour income fluctuates a lot.
Like you guys, your incomefluctuates, mine fluctuates.
And so like you can get an idea ofa baseline if you know like, okay,
(09:45):
what are my monthly bills andexpenses?
How much on average do I typicallyspend?
Maybe like, you know, going out,whatever it is.
And that's going to give you abaseline of how much money you
need to make to be able to dothose things.
But you can also reverse engineerin the sense of like, okay, well,
how much do I need to save forretirement?
(10:06):
I need to save for a house basedoff of those goals.
And then, of course, I willincrease that baseline.
And if you are expecting to make,you know, X amount per month,
that's great.
You can set up automations into
savings accounts, whether it'syour emergency fund or your house
savings.
But it is also important to track
it because let's say you have ahigh month.
(10:27):
Right.
And if you're not really paying
attention and you're like, oh, Ijust have all this extra cash,
you're probably just going tospend it.
Right.
But when your income fluctuates.
Just like there's high, there'sgoing to be lows too, right?
And so you have to make sure youactually, you know, outside of
your automations, you canmanually, you know, set that
excess aside and maybe like anincome buffer.
That way, if you do have a lowmonth, you can make sure you have
the money there to make sureyou're still making those auto
deposits, right?Or sometimes people have your
(10:48):
income fluctuates a lot or justbecame self -employed and you
don't feel comfortable setting upautomations because your income is
not as secure.
that's fine, right?
But at least if you're tracking itevery month, you have more of the
reminder to make manual deposits.
Because if you're not looking at
it, you're not tracking it, you'renot going to know how much you
have left over.
And you're probably not thinking
about going and pressing transferevery single month.
(11:09):
So yeah, I would say budgeting,keep on it.
Set up automations if you can.
And if not... make sure you're
reminding yourself to set thatmoney aside.
Cool.
So can you talk a bit about
actually acquiring debt, maybebuying a vehicle or anything, how
that can affect your ability toget approved if you do that right
before you get a mortgage?Yeah.
So I would say get the housefirst, because once you have the
house, they're going to offer youthe world when it comes to
(11:33):
vehicles.
When you go the opposite way, you
know, you secure the vehicle.
And I mean, generally, it's pretty
easy to get approved for a loanfor a vehicle.
But now that liability eats upyour purchasing power.
So the ratios will go downsubstantially.
I definitely should have thenumbers on this, but it is huge.
And so if you can, I would waituntil you have a house to finance
a vehicle.
(11:53):
vehicle.
Right.
Especially now with like vehicle
loans in general, if somebodyalready has one, I'm seeing like
just the clients that are comingto me, people who have acquired a
vehicle loan in the last fewyears, you know, vehicle loans
that you get at like four or five,6%, they're now paying like 10 to
12%.
In your experience, maybe from
(12:13):
what you've looked at, does inthat sense, even though you'd be
dragging out the loan.
In that case, would you recommend
rolling that vehicle loan into themortgage if it's at a lower
interest rate?So you could do that if you're
doing a refinance, you could dothat if you're doing a refinance,
but on the purchasing side, youcan't include anything outside of
the home.
I have a partner that I work with
and he does some pretty coolthings with financing vehicles.
(12:37):
And so let's say you own a companyand you have a vehicle personally.
You can actually sell it to thecompany and now it's in the corp.
So it doesn't report on yourpersonal profile.
There's also ways to stretch outyour amortization.
So if you bought the vehicle andit's a newer vehicle, but you
shortened it, your payments arehigher.
They're able to stretch that out,lower the monthly payment, and
(12:58):
then give you access to morepurchasing power.
So they can do that with boats.
They can do that with trailers.
So there's a lot of options.
And I think some people don't know
that.
Like you wouldn't really think
about that, but it is somethingthat can help.
Because if you are stuck with thisvehicle payment, I mean, you can't
really get rid of it.
You just have to work with it and
(13:19):
try to fit the numbers in thatway.
So I guess there's that guy, Iguess there's that guy, in a
sense, he's kind of like a vehicleor... asset financing broker in
the sense where like, let's say ifyou went to just like a car
dealership, they're just going togive you whatever the lending
options that they get, like withthe institutions.
Whereas this guy maybe has moreflexibility for that loan for you.
you Yeah, he's definitely afinance guy.
(13:39):
I don't know how he does hismagic, but he does it.
And he's a great asset to mybusiness.
So I love working with him.
The other thing he can do is he
can pull equity out of thosevehicles.
And I don't know, they kind ofcracked down on it a little bit
now, but you were able to pullequity.
out of those assets and use it fora down payment.
(14:01):
That's crazy.
I've never heard of that.
I've heard of stuff like thatbefore, but I wasn't sure on the
rules because, well, let's say,you know, there was a point, maybe
you can still do it now, but youcould get like a brand new vehicle
at 0 % interest, right?And so if you could leverage what
you've paid off there and use thatdebt, I don't know if you'd be
able to keep the 0 % interest orif you'd have to increase it.
But yeah, like kind of refinancingor pulling that equity up to then
(14:24):
put it somewhere else.
It would be similar to like a
refinance in a car where theywould pull the equity and then
your interest rate would go up forsure.
But maybe it would be lower thanjust like a standard loan or line
of credit card because there's anactual app to it, maybe it would
be lower than just like a standardloan or line of credit card
because there's an actual app toit, potentially.
I have a really random questionabout condo fees.
Going back to say somebody is afirst -time homebuyer, we were
(14:45):
talking about like what theprocess is, like what the pre
-approval looks like.
If somebody was purchasing a
condo, how did the condo feesimpact what they can qualify for?
Well, they go directly against theratio.
So if let's say it's 350, thenthat takes away from their monthly
amount that they're able toqualify for.
So there is a huge fluctuationwhen it comes to condo fees,
because it's not just condo fees,it's property taxes.
So both of those have to worktogether.
(15:06):
Well, they have to fit within theratios, right?
That sometimes is tricky becausecondo fees have gone up a lot.
Like I say 350, but that's like,that's really light these days.
That's really light.
Yeah.
Well, and the other thing is ifcondo fees are including heat,
right?Because people don't know that we
also have to debt service heat,which is actually a huge expense,
which we don't debt serviceproperly.
I think in general, we do about$100 a month.
(15:26):
But like, I know that my heat billis a lot more than that,
especially in the winter.
Yeah.
Sarah with credit, do you have anysuggestions?
Like I know some banks offer it,like just when you log into your
banking portal, they might saylike what your approximate credit
is, but are you familiar with anyplatforms or online websites or
anything where people can checktheir credit for free?
Yes, so I do suggest that clientsdownload BorrowWell, which reports
Equifax, and then Credit Karmareports TransUnion.
And usually between the two ofthose, you can get a pretty good
(15:48):
idea of where you're sitting.
Now, I want to preface that with
they are a marketing... company.
Both of them are.
So you're going to go on andthey're going to offer you the
world.
And I don't suggest that you take
it because there'll be a, you'repre -approved, you're pre
-approved, right?And sometimes that can just lead
you down the wrong path.
What I do suggest is there is a
(16:11):
rule of thumb we use.
It's two, two, two.
So lenders want two years ofhistory on two trade lines for $2
,000 or more.
And that's going to give you the,
I guess, backing in order to get amortgage so if you have clean
repayment history two yearsminimum yeah and two trade lines
can be a credit card it can be aline of credit we do use cell
(16:32):
phones they're not generally usedbut borrow well does have a
program right now where you canrecord your rents i believe which
can act towards your credit scorebecause i mean there's a lot of
people out there that are rentingand they've been renting for years
but they're not getting thebenefit of seeing that on -time
payment each month just becauseit's not recorded so that's
another way to help build creditin the background i've seen
(16:55):
different programs where you maybepay a subscription or they pay
your rent for you in that sense soyou pay them they report that
payment and then they pay themortgage but jenna where you maybe
pay a subscription or they payyour rent for you in that sense so
you pay them they report thatpayment and then they pay the
(17:17):
mortgage but jenna Like obviouslywith Sarah, okay, as soon as
possible, we should get that pre-approval to figure out how much
we can afford.
But Jenna, how soon do you
recommend actually starting thehouse hunting process?
Because I know some people arelooking and they're kind of
keeping their eye out and they'relike, okay, yeah, if something
comes up, I'll get it, but I mightnot buy for five years.
So I've heard of some realtors whowill maybe put you on an email
(17:41):
list where you can like send themdeals and stuff.
But yeah, like, so how soon in theprocess do you recommend somebody
actually reaching out to you too?start that process?
Well, it depends.
Sometimes they'll go to the
mortgage broker first, likesomebody like Sarah, obviously to
start that pre -approvalconversation, which that is the
first step.
Then you should come to me, but
(18:03):
often they might come to me andthen I recommend somebody like
Sarah.
And then we kind of figure out,
okay, great.
What's the timeline from there?
It's so hard.
I work with some clients where I
show them one house and that's,you know, they found the perfect
one.
Often it takes more time than
that.
So I have a lot of clients who are
(18:24):
sort of, I don't know, likesometimes six to 12 months out,
they just want to start receivinglistings, they want to know an
idea of, you know, if their budgetis 500 ,000, you know, what does
that look like?What are their options?
What areas can they purchase in?So just to start receiving some
listings and kind of dip theirtoes into it a little bit.
I have a lot of clients who dothat.
But I have other clients where Youknow, we don't really start the
process until they're like, yep,say like their rental is coming up
and their lease is ending in threemonths.
(18:46):
We start looking right away and weknow that we have a little bit of
a time crunch.
So it just depends on everybody's
situation.
But typically, I mean, like you
don't really start doing showingsof properties until you're
probably a little bit more seriousand ready to like make that next
step.
I mean, there's like open houses,
you know, show homes, like there'slots of things that you could do
when you're sort of in thestarting phase to figure out what
you want and where you want to be.
(19:07):
So yeah, I think everybody's just
a little bit different.
But if you are interested in
receiving those like listingnotifications, most of the time it
is like set it and forget it typeof email notification.
So it's not like it's extra workfor your realtor.
It's really easy to set up andchange the parameters if something
changes down the road.
So that certainly can't hurt just
to... see what's out there.
That's super interesting because I
do have clients who, superinteresting because I do have
(19:30):
clients who, you know, they wantto buy a house at some point, but
they have no idea what themortgage amount would be, right?
Whether it's based off of whatthey get approved for or based off
of what they're looking for,right?
And then I'm like, well, I don'tknow how much we should start
saving because, well, I don't knowwhat your goal is.
And so then we just start savingto save.
But it's interesting to know thatthese people, even if they're not
(19:51):
ready to buy right away, they canstill start the process so we can
at least get an idea of.
how much we should be setting
aside because, you know, maybe wecould save a little bit less based
off the timeframe, then maybe youhave a bit more money to enjoy or
go on that trip while saving for ahouse.
So yeah, it's nice to know thatpeople can kind of get started.
And what type of offerings do youhave?
Like when somebody wants to workwith you, like, what does that
(20:14):
look like?What are their options?
Right.
So I like to look at the full
picture.
I always like to even just use a
house as a reference, right?You need to make sure your
foundation is solid and secure.
That way, everything you're
working towards doesn't just comecrumbling down, right?
So We usually start with thebudget, right?
We break it down.
We see, okay, how much money do
you have coming in?How much money do you have left
(20:35):
over?And then we can make a plan for
that money.
But before we can make a plan for
that money, we need to make surethat your income is secure, right?
Because, you know, if you can'twork or you're in the hospital or
whatever it is, and you don't haveany income protection.
You can't really keep saving andinvesting in that time frame to
your goals is just going to beextended.
So we need to make sure yourincome is protected.
That way, if anything happens toyou, you can keep saving.
(20:57):
And then from there, right, thenwe can also look at if you do have
any debts, we can put together astrategy to.
you know, figure out when thatdebt can be paid off, right?
We can look to see if there's anyways to minimize your interest
paid off sooner.
But basically, right, you really
want to tackle that debt, maybebefore you start saving and
investing, really depending onwhat that interest rate is,
because there's no point innecessarily saving and getting
(21:17):
maybe like a 2 % high interestwhen you're paying 10 to 20 % in
interest in debt, right?So debt really needs to come
first.
And then once we have a handle on
that, then we can look at yoursavings.
So that could be building anemergency fund, income buffer, you
know, saving for fun things liketravel, right?
Making sure those are set up tohit those goals.
And then from there comes yourinvesting, right?
Because if you just jump toinvesting without doing any of
these things first, If you loseyour income, you drain those
investments.
(21:37):
If an emergency comes up and you
have no money set aside in yoursavings and the market's down,
well, you don't want to pull thatmoney out when it's down.
We see the market goes up and downall the time.
And so before you even startinvesting, it is really important
to have that nest egg so that ifsomething happens, you have the
money set aside.
And then you can wait for your
investments to recover if youdidn't want to take it out.
But yeah, basically that kind ofsums it up, right?
(21:58):
Starting from the ground, workingour way up to make sure that, you
know, if anything happens, there'sa 99 % chance you will still be
able to hit your goals.
I wanted to talk a little bit on
the budgeting side that I do in myprocess.
wanted to talk a little bit on thebudgeting side that I do in my
process.
So when you're saying we don't
know what they can actually affordlike monthly, that is something
(22:19):
that we go into when we're doingthe pre -approval.
I don't ever want a client to behouse poor.
I know that that happens so often.
And so we do look at, hey, are you
renting right now?How much is your rent?
Are you comfortable in that area?Or is there some room?
And so that's something that welook at seriously.
When I bought or me and my husbandbought our first home, we didn't
take into account the propertytaxes.
(22:40):
which if you know anything aboutAlberta, like they're pretty big
here.
And so that was an expense that we
didn't account for.
And it did leave us a little bit
light at the end of the month, youcould say, especially year over
year with that increase.
Definitely knowing what you're
comfortable spending each month onyour property taxes and your
mortgage is a big part of theprocess.
Oh, I totally agree.
And I really appreciate, Sarah,
(23:01):
when you work with my clients thatlike you're not stretching their
budget to the very end, you know,just being very realistic with
trying to stay with what they'recomfortable with.
Because I think there's a lot ofbrokers who just say, oh, yeah,
like this is your max.
Like, you know, go for it.
You can afford 700, you know, andthey don't really break down what
that actually means.
in terms of the monthly payments
(23:21):
and everything outside of themortgage.
So I really appreciate that.
I just wanted to let you know.
Oh, good.
I just wanted to let you know.
Oh, good.
Yeah, no. And that's the thing is
I learned from my own experiencethat that was important because we
told our broker at the time, well,banker, we said, hey, we're
comfortable at $2 ,500 a month.
And that was our cap.
We didn't think about anything ontop of that.
And so then when our bills arecoming in and we're like closer to
(23:42):
$4 ,000 a month, it was tight.
I never want that to happen to
anybody else.
Do you have a purchase calculator?
Like, you know, purchase price isthis, so your monthly payments are
this, but then your condo fees andyour property taxes and like all
of those things are kind of in onespot.
Yeah.
So when I do my pre -approval, I
actually go through that in areally detailed spreadsheet for
clients and we break it down sothat they can see, they can see
(24:03):
what their maximum is.
And then we can also run numbers
on potential properties.
So if they're interested and
they're saying, Hey, you know,this one, this looks.
a little bit out of reach for uscan you just run the numbers and
see what that looks like monthlyand then sometimes you know that
can be the deciding factor for aclient saying hey we're willing to
pay the extra however much a monthor they're like no you know what
(24:27):
that's out of our budget we can'tmake that work and so I think it's
really important to be detailed inthat part of the transaction so I
totally agree like there's so manydifferent dynamics too especially
with my clients and I'm looking atthe budgets it's like okay well if
you have kids totally agree likethere's so many different dynamics
(24:48):
too especially with my clients andI'm looking at the budgets it's
like okay well if you have kidsyou're probably spending a lot
more money, right?And so that's going to eat up a
lot of that affordability.
This is in the house related by a
client once.
And she's like, you know, I want
to buy a, you know, Toyota4Runner.
You know, I really want to buythis vehicle.
And I said, okay, well, let's takea step back and put that into your
budget and see what that actuallylooks like.
And yeah, for her, it was like,okay, do I... care enough about
(25:09):
this vehicle to lose my purchasingpower on a monthly basis or am I
okay not downgrading but going forsomething a bit more expensive
that still makes you happy just sothat you can enjoy your day -to
-day a bit more and yeah so I feellike that's really important with
a mortgage because okay maybe youcan get approved for x amount of a
mortgage but do you really wantthat bill yeah so yeah it's all
(25:30):
about yeah the person what theiractual expenses are and how it
fits yeah well i think just it'shard because we don't want to do
that stuff we don't want to getinto the like how much am i
spending each month on like eatingout right but i think the first
step is being aware of what yourexpenses are and then you can work
your life around that just it'shard because we don't want to do
(25:53):
that stuff we don't want to getinto the like how much am i
spending each month on like eatingout right but i think the first
step is being aware of what yourexpenses are and then you can work
your life around that Exactly.
Yeah, you don't always have to
sacrifice the fun things.
You can just maybe not get the
most expensive thing over here,right?
So that's the board world.
It's all about balance.
(26:13):
Okay, so let's talk a little bitabout our webinar.
So we're hosting a webinar onWednesday, July 30th, where we're
going to dive into first -timehomebuyers and the whole process.
So as a financial advisor, as afinancial advisor, right, I help a
lot with the budgeting, saving,investing, you know, saving the
money for the actual down.
So I'm going to be talking a lot
about, you know, setting yourselfup for success in that area and
making sure you're using the rightaccounts to your advantage.
There's also going to be some hotlittle tips and tricks that a lot
of people don't know that can helpbenefit you when it comes to
saving in like an FHSA or an RRSPwhere, you know, there could be a
(26:37):
situation where you think it's toolate.
But there's little tips andtricks.
If you're working with the rightperson, they can get you the right
strategy.
the right strategy.
And on the real estate side ofthings, we're just going to do
like a whole overview of whatevery step looks like.
Because I mean, just likeinvesting or mortgages, nobody
teaches you this stuff.
You don't learn these things in
school.
And I just think it's really
(26:58):
important to have.
at least a basic overview of what
does an offer actually look like?What does showings look like?
You know, like, how does it workwhen the realtor just like books a
showing?What does that even mean?
And then the entire offer process,like I'm sure if you're thinking
about buying a home, you'veprobably heard at some point, the
term condition, you know, like acondition on an offer, what does
that look like?So we'll just take everything step
(27:20):
by step and just chat a little bitabout what the home buying process
as a whole looks like.
And then on the mortgage side of
things, I'm going to talk aboutgovernment programs that are
accessible to first -timehomebuyers.
What does it look like to get apre -approval?
And then a lot of...
What I want to talk about is
having the right team behind youto support you through the
journey.
Because being a first -time
homebuyer, it can be scary.
It can be nerve -wracking.
And you want to make sure that youare surrounded with support and
people that can help you reachyour goal.
Jenna, if clients are looking toreach out to you, how can they
find you?Yes.
Okay.
So my website is www
jennadrummond .com.
(27:40):
A little caveat, I am getting
married in September.
So my last name is changing.
So if you're listening to thispodcast.
After September, my new website isgoing to be www
jennabole .com.
And my Instagram is Jenna Lee
Drummond.
And my YouTube, I also have a
YouTube account.
It's also just Jenna Drummond.
That will change.
Stay tuned.
But yeah, those are primarily theways that you can get a hold of
(28:03):
me.
Cool.
And what about you, Tegan?If somebody is looking to get
started in the budgeting processor just even talk to a financial
advisor, how can they find you?Yeah.
So I do a lot of my marketingthrough Instagram.
So my handle is at financialfatigue.
I kind of did that on purposebecause I also, my last name will
be changing at some point.
So this way I'll say the same, but
yeah, at finance with Teague,that's where you can contact me
through Instagram.
You can also email me.
It's just my first name, Teagan atfinancewithteague .com.
(28:26):
So super easy.
And then yeah, you can set up a
meeting.
I do also have a link in my bio on
Instagram.
So if you just want to go in there
and book a free initialconsultation, just to kind of get
an idea of like.
how my services work, how they
would apply to you and maybe getsome questions answered.
You can always use the link onthere.
(28:46):
It's pretty easy.
Okay, perfect.
So I am looking forward to seeingyou guys at our first time home
buyer webinar, and we will includesome details for that if anybody
wants to attend.
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