Thursday, 27 October 2016

Why I Love the Shoppers Optimum Program

Shoppers Optimum Program
It feels like every single store in the universe has some sort of rewards program they offer, and if you're anything like me, your wallet is loaded down with all kinds of cards. At least now lots of places have apps, so it's your phone that gets loaded instead of your wallet (much easier to carry). Of all these programs, though, one of the longest running and most rewarding is the Shoppers Drug Mart Optimum program. I've been collecting Optimum points for years and years and have received hundreds (probably even thousands) of dollars of free stuff over that time. There were concerns back in 2014 when Loblaws bought Shoppers that there would be significant changes to the program and then us Optimum members would get screwed. That really wasn't the case, though, they have kept things almost the same and Loblaws actually adopted it's on PC Points program that is also quite good.

Why is it so Great?
On its face, the program doesn't look like anything special. You show your Optimum card when making a purchase at Shoppers, and you'll earn points at a rate of 10 points per $1. You'll need to build up at least 8000 points to make a redemption and would get $10 at that level. The redemption levels look like this (usually, more on that later):


Now, having to spend $800 just to get $10 back does not exactly sound very generous, but the big advantage of the program are the constant offers they have available to boost those earning amounts. I don't even bother shopping at Shoppers Drug Mart unless there's an extra point offer available because their regular prices tend to be a bit higher than I can find elsewhere. Just as an example of the type of offers available, right now I have 10,000 bonus points if I spend $60, 1000 bonus points if a buy a Tresemme product or 800 bonus points if I buy eggs. If I spent exactly $60 (before tax) and used all three offers, I would get 11,800 bonus points plus my regular 600 points. That would give me enough points for $10 of free stuff and points leftover. Oh, the wonder of it!

Sure, it's a bit of work to figure out what are the best days to shop and the best offers to use but it's worth it. Try to save up your purchases and do a bigger shop on the days that will give you the biggest bang for your buck. It also pays to take a look at the flyer for the week to see what products are on sale or may have bonus points available. I don't actually shop at Shoppers a lot, but usually once a month I'll plan a trip and stock up on the essentials for the next while. The best offer days to hit up are when they have 10x your points when you spend $50 or more or when you can get 18,500 points on a purchase of $75 or more (that one is happening this weekend, October 29-31). Make sure you also download the app because you'll get offers specific to you and your purchase history.

The Big Redeem
The best part is the day you get to redeem your points for free stuff, but there's also a few tricks to make sure you get the most bang for your points. You can tell just by looking at the table above that it makes sense to hold onto your points until you reach the 95,000 level. The lowest level gives you a return of only 800 points per dollar whereas the highest level will bring that return up to 558 points per dollar. An even better reason to stock up your points is that once in awhile there will be a 'Spend Your Points' event and your points will be worth even more. There's no guarantees on the actual amount, but the last couple have bumped up the 95,000 level to $200 (extra $30) worth of free stuff, and the 50,000 level went up to $100 (extra $15) of free stuff. Now we're talking!

Let's look at a quick example. If you only shop on the 10x your points days and only do the maximum redemption on a 'Spend Your Points' day, you would need to spend $950 to get $200 back. That's a pretty good perk if you're buying things you would have to buy anyways!

Beauty Boutique
I've talked about my Sephora addiction before, and that doesn't seem to be decreasing at any point soon, but Shoppers also offers a high-end beauty product boutique so you can earn Optimum points at the same time. They offer a lot of the same brands you'll find at Sephora (think Clinique, Stila, Benefit, Dior, etc.) and also have free shipping over $50 and free returns. Keep your eyes open for special points offers on products you already use and sign up for their email list for even more promotions.

So Long Credit Card
Some of you who are already Optimum point pros might be thinking, hey, what about the RBC Shoppers Optimum Mastercard and debit card? Well, both options have been halted, and no new applications are being taken. At this point, existing customers are still able to use their cards and earn extra points, but I wouldn't be surprised if you find yourself searching for a new card at some point. If you want some more information about the split, you can check out this article. This isn't that unusual if you're also a Costco member you probably remember when they switched their allegiance from American Express to Mastercard last year. 

The credit and debit card options were a good way to earn extra points and even earn points when you shopped at other stores, but I never had either and have still done pretty darn well collecting points. Hit up those extra points days and hoard your points until special events and you'll end up walking out the door with a cart (one of those adorable Shoppers mini carts) full of free goodies. You'll also get to bask in the jealous stares of the people behind you in line when your $200 bill drops right down to ZERO


Check out the Shoppers Drug Mart website for more information on the Optimum program and make sure you download the app (Apple or Android) so you can take advantage of your specific offers. 

Shoppers Optimum Program

Monday, 24 October 2016

10 Tips for a Money Savvy Christmas

Christmas on a Budget

There are 61 days left until Christmas, and I don't know about you guys, but I'm thinking ahead and getting started on my planning. We are hosting this year which means there are more things to prep for so I'm hoping to get most of my shopping done early so I can worry about other things at the last minute. How about all of you? Do you know what you're doing for Christmas and has anyone started their shopping? 

As much fun as Christmas is, it can also be a real drain on your savings so today I've got a few tips to help you stretch your holiday budget. 

1. Start Early...Like NOW
We're already creeping up on the beginning of November, and the sooner you start your Christmas shopping, the better. Starting early means, you'll have more time to set money aside, more time to seek out the very best deals and more time to make things if that's the route you're going. It's even a good idea to keep your eyes open year round for something that would make a great gift, especially if you're travelling and can pick up something unique. You can even get super keen and start next years prep on Boxing Day. This is the best time to get some new holiday decor for the following year as everything will be on clearance.

2. Go for Secret Santa
This isn't such an issue for me as I have a tiny family, but if you're part of a big gang, then I highly recommend pushing your family to go the Secret Santa route. This will automatically make a drastic cut in your holiday budget because you'll only have to buy for one person instead of who knows how many. It also means you can put a little more effort (money) into making that one gift super awesome. If you have kiddos in the family, you can continue to buy for all of them (Christmas really is about the kids right? I only say this because I'm still the youngest!) and just do a Secret Santa for the grown-ups. I know some of you are probably wondering how you can broach the subject with the fam, but I can pretty much guarantee that if you're worried about the cost of shopping for everyone most of them will feel the same.

3. Quality over Quantity
I LOOOOVE stockings, they are my favourite part of Christmas, but I like when I get stocking stuffers that I will actually use and not just dollar store junk. No one wants to be stuck with a bunch of weird knick knacks that will just end up in the trash so put a little thought into the little things and go for just a few, higher value items. Stockings are also the perfect place to use up some of those samples that are cluttering your cupboard. If you're a Sephora addict (raises hand) then you'll know what I'm talking about and any other beauty product junkies on your Christmas list will appreciate a good quality sample. Quality over quantity can also go for your holiday decor; a few tastefully placed items can look better and end up costing less than if you cover every surface of your home with cheap decorations.

4. Shop Local
My favourite places to find unique gifts are at farmers markets or craft fairs that feature local makers. We hit up the Etsy Made in Canada Market last month and have already checked a few people off the shopping list with some really great (and reasonably priced) finds. Locally made jewellery is one of my favourite things to buy for the ladies in my life because it is unique, easy to pack if you're travelling and you can get great deals on things that look way more expensive. It's also nice to be able to share a little part of your city with people who might not live in the area. Edmonton has some fantastic local vendors, and they're amazing goods will give you bragging rights ;) A few of my favourites are Jacek Chocolate Couture, Cloud & Lolly Jewelry Studio, DogDog Goose Houndmaid Goods, Salgado Fenwick, and Evoolution.

Image Credit: Jacek Chocolate Couture
5. Craft it Up
Maybe you are crafty yourself and don't even have to rely on local vendors for handmade Christmas gifts. There are lots of DIY projects you can try your hand at that make really great and meaningful gifts for your family. I taught myself how to crochet a few years ago (YouTube tutorials all the way), and I've made scarves, blankets, and toques as gifts, and people really do appreciate handmade gifts...as long as they are usable. My mom still wears the first scarf I made her and looking at it now it's kind of embarrassing because my skills were seriously lacking at the time. Pinterest is a great resource for finding DIY Christmas gifts, but I recommend taking a read through some comments before attempting any project as there are definitely some duds out there. And don't forget about Christmas baking, a fancy (not fancy) tin of home baked goodies makes a frugal Christmas gift for co-workers, teachers or neighbours.

6. Sign Up for Email Lists
It's inevitable that you'll end up having to hit up some regular old store for at least a few items, so you want to make sure you get the best deal possible. If you know which stores you'll be buying from it's not a bad idea to sign up for their email lists. It seems like every store nowadays gives you some sort of offer for signing up and they'll also email you out special offers from time to time. You should also do a quick Google search before making any online purchases to see if there are any available coupon codes you can use to save a few extra dollars.

7. Making Use of Online Perks
Online shopping is so much more time efficient and way less stress than tackling the crowds at the mall in December, and it also gives you the chance to save extra money. Not only can you search for coupon codes but there are also sites that will pay you back when you shop. If you are an online shopper and don't have an Ebates account, you are seriously missing out. Ebates is free to join, and it gives you cash back rewards to shop at many online stores you probably already frequent (think Sephora, Gap, Hudson's Bay, etc.) You can get up to 8% cash back at some stores, and they will send you a cheque in the mail or deposit funds to your PayPal account. It really is that simple, just go to Ebates, set up an account and before you make a purchase online Ebates first and link to the store through there and you're all set. Another useful resource that works in the same way is Swagbucks, but instead of getting paid in straight cash you earn Swagbucks rewards which you can redeem for gift cards. Swagbucks also has other ways of earning rewards like surveys, a search function, etc. so if you're willing to put in some extra time you can make even more. If you only want to use such a service for online shopping, then Ebates is the way to go.

8. Try Your Hand at Thrifting
Searching thrift stores for the perfect gift can be a daunting task, but if you're looking to add some holiday decor to your own home, they can be a good option. I was at Value Village last week looking for Halloween costumes, and they already had Christmas decorations out. I was tempted by a few things, but our selection of decorations is already pretty extensive. I remember our first Christmas in our house was hard on the budget. We had always just had a small tree in our condo and didn't have any outdoor space to put up lights so we ended up splurging on a bunch of things and I wish we had thought of scoping out thrift stores to cut down on the cost.

9. Nix the Fancy Wrapping Paper
For something that just gets torn up and thrown in the garbage, wrapping paper sure is expensive. And if you buy the stuff from the dollar store it's so thin that I always ended up tearing it to shreds before the presents even make it under the tree. Plus, lots of wrapping paper can't even be recycled so not only is it pricey, it's also bad for the environment. What can you use instead? Plain old brown paper. Cheap, easy to wrap with, always recyclable and you can decorate it yourself. Pick up some ribbon (dollar store ribbon works fine), and beautify things a little. You can even grab a few Christmas stamps to make things a even more decorative. Brown paper also gives you the option to write right on it so you can skip the gift tags as well. Win win!

Image Credit: DIY Network (Ellen Foord)
10. Get Specific About your Wish List
This one might be a bit awkward for some people, but my family has always been open about letting everyone know what we actually want for Christmas, so there are no disappointments on Christmas morning. Sure, it takes away some of the surprises, but it means you won't have to put on any fake displays of joy and won't have to make any returns. There's always a few things I think of during that year that I would love to replace but don't really want to spend the money on so I add those to my wish list. This year it's a new cutlery set...I still have the crappy old Ikea cutlery that everyone buys when they first move out, and an upgrade is long overdue. Who wants to spend money on new cutlery, though? My parents, that's who ;)

Christmas on a Budget

Friday, 21 October 2016

So, Those New Mortgage Rules?

Canadian Mortgage Rules

There's been a whole lot of chatter going on about the new mortgage rules instituted here in Canada, and I've finally had a chance to put pen to paper (fingers to keyboard is more accurate I guess) and share my thoughts with you guys. 

The Stress Test
Ok, let's start with the most controversial change. The stress test comes into play for anyone who is getting an insured mortgage. What exactly is an insured mortgage you ask? It is when you are putting down less than 20% down and have to get the extra CMHC insurance. If you are in that boat, you now have to qualify for a much higher interest rate than you will actually be paying on your mortgage. As of right now, you should be able to get an interest rate on your mortgage under 2.5%, but the qualifying rate you have to meet is currently set at 4.64%. Quite the jump hey? The Bank of Canada sets the rate, and they figure it out by taking an average of the posted rates by the top five Canadian banks. So even though you have your lower rate locked in for (most commonly) five years, you'll still have to meet the standards for the higher interest rate, and this means the bank won't lend you as much money. 

But why? Basically, the government is forcing you to be responsible and not overstretch your budget. They don't want you to spend right up to your max and then not be able to afford your mortgage payments if rates skyrocket when you have to renew. Makes sense...sort of. I'm all for not overextending yourself when buying a home and I don't necessarily think that it is your right to own property. However, it is already a huge challenge for the younger generation to get into the housing market and making things harder is not a great option. 

Just over six years ago we bought our first house and looking back now there's a pretty good chance we wouldn't have qualified based on the new standards. At that point, I had only been out of school and working full time for about a year, and the bf was in school and only working part-time...what in the world was the bank thinking giving us hundreds of thousands of dollars? But you know what, we made it work and are in a pretty good position right now. Five years can be a long time, especially when you are at the start of your career. I'm making substantially more now than I was then and the bf is also working full time. Maybe we stretched a little at the beginning, but I never felt like we were uncomfortable or lacking in any way. Yes, it's right to be cautious and you need to go into buying a home with a budget you can live with but factoring in some growth over those five years isn't exactly far fetched. 

This stress test is obviously going to impact first time home buyers the most, as they are more likely to go in with less than 20% down but let's not forget about those people who are looking to upgrade. Say you bought a condo three years ago in Vancouver and are now planning on adding a baby to the mix and need some more expansive digs. Do you have over 20% built up in equity on that condo? If not, and you haven't saved up the balance, you are going to be in the same boat. Vancouver just recently introduced that new 15% tax on foreign buyers and their housing market has taken a hit so this could be more and more common going forward. 

The added pressure on first-time buyers is also going to have an impact on the rental market. Not so much here in Edmonton, but in those hot markets like Vancouver and Toronto occupancy rates are really low, and it's already a challenge to find a decent rental. With more potential home buyers being forced to hold off there will be more people competing for rentals. And what does competition do? Drives up prices. Now you'll have a population are paying higher amounts in rent but also have to try to save more for a down payment. That's a tough situation...



Principal Residence Loophole
When you sell a home that is considered your primary residence you don't have to pay tax on it, thank goodness for that otherwise no one would ever be able to upgrade their home! The rules for this were never governed that tightly, and there was no reporting system for tracking that information. The government is now closing up a big loophole with this exemption, and you will only be able to claim a property as your primary residence if you are a Canadian. Kind of feels like this should go without saying, but now it's official. All of us Canadians will still be able to take advantage of the exemption, but we will now have to report any sale of a principal residence when we file our taxes so the government can track it. There are situations where someone has owned two homes, sold the one they lived in and claimed it as their principal residence (that's fine) and then moved into the second house and later sold that one also as a principal residence. Both sales are ok, but you need to factor in the time you owned the second home and didn't actually live in it. That amount of time would not be exempt and any gain in value during that period would be taxed. This is not really a rule change, but the stricter regulations now make you more accountable. Loophole closed! 

Mortgage Default Insurance
Any mortgage that has a down payment of less than 20% is required to be backed by CMHC, which provides 100% coverage if there is a default on the loan. The full amount of the program is supported by the government (aka your tax dollars), but there is also a mortgage default system that is a little more behind the scenes. Banks will also take out their own default insurance on a loan that does have more than a 20% down payment and a portion of this is often also covered by the government. The whole thing is kind of convoluted, but the proposed changes include some form of risk-sharing (yet to be determined) between the government and the banks. This could be in the shape of a deductible and/or increased rates after a claim. This would be just like your home or car insurance; if you make a claim you likely have to pay a deductible, and your rate will go up in the future. Now as consumers this doesn't affect us, but we can be fairly certain the banks won't just eat these extra costs. Instead, they will pass the cost onto their customers in the form of higher mortgage rates. It sounds like this is still a work in progress, but changes are supposed to be set up in January. 

There we have it, a not so quick review of the new mortgage rules that were introduced. I like the tightened restrictions on foreign buyers and sellers, and I don't even mind the changes the mortgage default insurance, but I think the controversy surrounding the stress test is justified. What do you guys think? Do you support the new rules? 


Canadian Mortgage Rules

Monday, 17 October 2016

Home Buying Series - Closing Costs


Here we go, the last post in my Home Buying Series! If you have missed any of the previous posts, you can find links to all of them at the bottom of this page. Today we're talking about closing costs...the worst! Those pesky administration fees that will cost you a pretty penny. 

So how much money are we actually talking? On average, closing costs will end up being between 2% and 4% of the purchase price of your new home. If you buy a $400,000 house, you could end up with closing costs as much as $16,000. Now don't freak out, you can have your closing costs added into your mortgage so that you don't actually have to cut your lawyer a cheque for $16,000 when you're likely already feeling the pinch from your down payment. 


What are you actually paying for? 
  • Lawyer fees / disbursements - this is the most obvious charge, and it likely won't be a surprise to anyone that lawyers are expensive but their expertise is necessary, and they'll get all the background work done for you. Expect to pay a real estate lawyer between $500 and $1500 (plus tax) to get your house purchase completed.
  • Land Transfer Fees - in most provinces, there is a land transfer tax (the amount varies by province), but here in Alberta we like to be a little bit different, so we have a land title transfer fee. The calculation for this is based on both the property value and your mortgage amount, you start with a $50 base fee and then add $1 for every $5000...you have to do this for both so if you are buying a $400,000 house with a 20% down-payment ($80,000). You'll have to pay $130 fee on the property value and $114 fee on the property value for a total land title transfer fee of $244. This is actually cheap when you compare rates across the country; if you live in Toronto, you have to pay both provincial and municipal fees. 
  • Property Taxes - Sometimes a seller will have pre-paid their property tax for the year, so you will be responsible for covering any amount they have paid for after the closing date. 
  • Title Insurance - Your mortgage provider may require you to get title insurance which protects from land disputes in the future. Usually, the Real Property Report covers this, but issues can arise that are as simple as your fence extending onto your neighbour's property. It's unlikely this will cause problems, but if you end up with nasty neighbours in the future who are up in arms, it will be title insurance that settles the dispute. 
There's also going to be other fees involved in the purchase of your new home that aren't exactly closing costs, but you'll have to pay them nonetheless. 

Additional Costs
  • Initial deposit - when you make an official offer you will have to provide a deposit on the house that will count towards your downpayment. There's no minimum amount, but you want it to be large enough to make you look like the real deal (your real estate agent will be able to help you figure out the right amount). 
  • Home Inspection - this is going to cost you whether or not you make it all the way to closing, but it's an essential step of the process. You'll likely spend about $500 on a good inspection, but it can save you thousands of dollars in headaches in the future. 
  • Appraisal - your lender may request an appraisal be done to make sure the house is worth what the seller is asking. Often your lender will cover the cost of this so be prepared to negotiate that with them. 
  • Home Insurance - your lender, is also going to require you to have home insurance all lined up before they give the final go ahead for your mortgage. 
  • Utilities - if you're coming from a rental situation you may not have had to pay utilities before so get in touch with your local power, gas, and water companies to get accounts set-up. 
  • Moving costs and the little extras - you can save yourself some cash by moving yourself, but you'll likely still need to rent a U-Haul unless you're blessed with friends with big trucks. There's also going to be new things to purchase for the new house...maybe you're doing some reno's, you'll likely want to get the carpets and furnace cleaned, and don't forget about buying a lawn mower, snow shovels, etc. 
There you have it, a nice long list of all the things you'll have to hand over your hard, saved dollars for when making your first home purchase. The good news is that once this is all done, you'll be unlocking the door to your very first home and will be ALL YOURS (minus that mortgage part your bank owns but let's ignore that for now)!

Here are the links to the all the posts in the series if you're interested: 

1. Home Buying Series - Renting vs. Buying
2. Home Buying Series - Saving Your Down Payment
3. Home Buying Series - Home Buyer's Plan (HBP)
4. Home Buying Series - Mortgage Pre-Approval
5. Home Buying Series - House Hunting
6. Home Buying Series - Closing Costs

Canadian Mortgage Rules

Wednesday, 12 October 2016

The Dreaded Raise Question

How to ask for a raise

“Women asking for raises should not only know their value, but they should ask with the confidence that they’re helping the company to be successful.” 
-Senator Kirsten Gillibrand

It's just a few more weeks until I hit my one year mark (how did that happen so fast!) with my no longer new job which means it's almost annual review time. That dreaded moment in employment where you sit face to face with your boss and look back on all the moments you've excelled and also (hopefully very few) moments you've sucked. Annual review time also tends to mean it's time to review your compensation and figure out if you deserve a bump in salary....oh the stress! Trust me, nobody enjoys asking for a raise, but it's a necessary evil when you're part of the working world and let's face it, if you don't ask you likely aren't going to get anything. 


Let's break it down and figure out the best way to tackle the raise question. 

Plan Ahead and Do Your Homework
Do NOT just walk into that meeting expecting a raise and have no evidence to back up why you deserve one in the first place. Make a mental list (or write it down) of your biggest and best on the job accomplishments and how they have impacted your workplace. This doesn't necessarily have to be about money...maybe you found a new program that increases efficiency or boosted morale with a new HR initiative. Whatever it is, make sure you are prepared to prove your worth. 

Raises are Normal but Not the Norm
Asking for a raise is not some crazy out of left field question, and I guarantee you are much more worked up about it than you need to be. If your boss has been a boss for awhile, they'll have been through this same conversation many times, and it's not their goal to make you feel uncomfortable. With that said, though, don't go in expecting a raise just because you've made it through another work year...you do need to earn it. 

Run the Numbers
Go in with a number and know the breakdown. The average annual raise is about 3% but if you are just plain awesome or maybe took on more work then feel free to bump that up a bit. I even like to shoot a little high, so there's some room for negotiation but know who you're dealing with and how they'll take it. It can also help to break it down to a monthly increase, so it doesn't look like such a big amount...say your current salary is $50,000/year and you are looking for a 5% raise. That's an extra $2500/year or a just a measly $208/month ;) 

Know Your Industry
Do a little research and figure out what other people doing a similar job to you get paid. This will help you nail down a number and keep you in the right ballpark. That's the second baseball analogy I've used in this post, I must have the Blue Jays on the brain or something! 

Don't Suck
Obviously, this goes without saying, but you should have a pretty good idea of whether or not you're doing a good job. Everyone makes mistakes, but if you're consistently screwing up or making bad decisions, then it's probably not the best time to ask for a raise. Put in a few solid months of good work and then reconsider. 

Take No for an Answer, and then Work Harder
You don't always get what you want, it's a fact of life. If you do all of the above and the answer is still a no take a deep breath and don't freak out. It could have nothing to do with you and simply be that the company doesn't have the budget for raises this year. Ask what you can do going forward to make it more likely you'll get a raise next time around. This will make your boss see that you're still willing to work hard and not just go and pout. 

Alternative Options
Your employment package often isn't made up solely of your salary. Maybe your company provides employee benefits, matches your RRSP contributions or is even willing to pay for some schooling. Know what's available to you and take advantage. If they're paying for benefits then treat yourself to a massage every so often and if you aren't taking advantage of a matching savings plan...well, you're nuts (see my rant here). All of these can also be factors that you can use in your salary negotiations. If there's a course you feel would make you more valuable to your employer bring it up and see if they'll cover the cost. There's also vacation days you can bring into play. If you aren't able to get a raise in salary, maybe you can get a few extra vacation days thrown into the mix. 

Ready, set, go get yourself that raise! You got this! 


How to ask for a raise

Monday, 10 October 2016

Home Buying Series: House Hunting

The house hunting process
We've spent the last few weeks talking about the process of buying your first home and today we finally get to the fun part. If you want to check out the previous four posts in the series all the links are at the bottom of this page. 

You've made the decision to buy a house and have your down payment saved up and have pre-approval for a mortgage so now it's time to find the house of your dreams...or maybe the more realistic house for the current moment. Remember, very few people buy their dream home right off the bat so be prepared to have to make some compromises when buying your first home.

Location, Location, Location
In my opinion, the first thing you'll want to narrow down on your house hunt is where you actually want to live. When the bf and I bought our first place just over 6 years ago, this was definitely the most important factor. We were willing to sacrifice on square footage so that we could be close to downtown and not have to commute. I have never regretted that decision one bit, I would be a pretty miserable person if I had to sit in traffic for 30+ minutes twice a day instead of my current 10 minute (15 on a bad day) round trip. If you're house hunting as a couple, you hopefully have similar ideas on location as that's a terrible thing to compromise on.

Needs vs. Wants
Once you have an idea of what area you want to live in, it's worth it to check out some available listings on MLS and see what type of homes are in your budget. Doing this first will help you be realistic about what sorts of features you can actually afford. I'm a list person so I would recommend writing down all the things you want in a house and then rank them by importance. The first few things on your list will end up being your needs (think at least two bathrooms and not so much a jacuzzi tub) and the rest will be the little extras that can push one house ahead. If there's two of you, it will be helpful to each make your own list and then see how closely your priorities line-up...maybe you're a perfect match, but most likely you'll need to re-evaluate a few things, so everyone is happy. This master list will be your go-to tool when figuring out which house will be the best fit. You might walk into a home that sways you with its prettiness, but if it doesn't check off the top items on your list, it's best to pass. Once you live in a place for awhile, you'll soon realize that sacrificing those things will make you crazy. 

Use a Professional
Get yourself a good realtor! For first-time home buyer's this is a must because it will give you access to someone who knows the ins and outs of the buying process. They'll also be an excellent resource for when you need to hire an inspector and a lawyer. Our realtor was a family friend and was such a huge help, she thought of so many things we never would have even considered when looking at homes, and I'm certain she's the reason we ended up with our current home.

The Hunt
I hear stories about people who look at a ton of houses before finally finding something, but that was not at all the case for us. We actually ended up buying the first place we saw (I told you our realtor was amazing!) We did look at a few other places (maybe 7 in total) before biting the bullet, but that first one was meant to be I guess. The first time we looked at our current house, it was right at the high-end of our budget, so we passed and kept looking. Just a couple of days later they dropped the price by quite a chunk, and we immediately knew that was the one...as did another buyer but we ended up with the winning bid. You'll want to look at a few places to see what's available but I think it's important to narrow down your search as much as possible, so you don't get burnt out. I actually loved looking at houses but was happy to find something quick. Patience is not my greatest virtue, and I would have become frustrated if we weren't finding anything that was a good fit. Once you've found the perfect place, you will need to get a home inspection to ensure there aren't any big surprises soon after you move in. If the inspection goes smoothly, you are ready to put in an offer and live through the most stressful hours (days) or your life! We were lucky in that we got the whole process done within 24 hours but that last phone call saying the sellers accepted our offer came at 11pm...not much is crazier than waiting to see if you are spending hundreds of thousands of dollars that day ;) 

Hello Homeowner
You are now the proud owner of your very first home! How does it feel? If you're anything like me you were probably dealing with a whole lot of excitement mixed in with a little "holy shit, that's a lot of money". Depending on how far out your closing date is you'll now be busy getting the closing finished with your lawyer and start packing up everything. Good luck!

Next week we'll talk about that closing process and what sort of costs you're going to be faced with. If you missed the previous posts in this series or just want a little refresher you can find them all here: 

1. Home Buying Series - Renting vs. Buying
2. Home Buying Series - Saving Your Down Payment
3. Home Buying Series - Home Buyer's Plan (HBP)
4. Home Buying Series - Mortgage Pre-Approval
5. Home Buying Series - House Hunting
6. Home Buying Series - Closing Costs

The house hunting process

Monday, 3 October 2016

Home Buying Series: Mortgage Pre-Approval

Getting pre-approved for a mortgage


If you've been keeping up with my Home Buying Series over the past few Mondays, you'll already know if you're ready to buy, how to save a healthy down payment and how to take advantage of the homebuyer's plan (HBP). Once you have your down payment saved up and you know where exactly the money is coming from you are just about ready for the fun part (bring on the house hunting), but there's one last step you want to take to ensure everything goes smoothing....getting pre-approved for a mortgage. 

Why exactly do you need to get pre-approval? 
  • Lock-in your interest rate, so you won't get stuck if rates go up (Usually, the quoted rate is good for at least 120 days and if rates end up going down your lender will meet the new lower rate.)
  • Set your spending cap (Keep in mind that banks will often lend you more than you really need so you should already have your budget figured out. Just because they are willing to give you that much money does not mean you need to take it all.)
  • Save time during the buying process (It can be quicker to get your final mortgage approved if your lender has already given you pre-approval and this also looks good to a seller if there are multiple offers.) 
  • Know your monthly payment (Based on the interest rate, length and size of your mortgage you'll get a pretty good estimate of how much you'll be paying each month, and that makes it easier to stay within your comfort level.)
  • Limit your stress (It will be a better buying experience if you know the houses you're looking at are in your price range and that the bank is willing to lend you the funds.) 
  • It's free (Sure you'll have to spend some time getting the required info together and meet with a broker but it won't cost you anything to get pre-approved and you're not committed to anything.)
To start the pre-approval process, you'll want to meet with a mortgage broker or lender to run the numbers. I recommend using a broker because they can get you access to the best rates and will do the shopping around for you. Reach out to friends and family and see if they have someone they would recommend. 

Your broker will need to know all your deep dark money secrets so be prepared and gather up your documentation. They will run a credit report so will need your SIN number, pay stubs or a letter from your employer to prove your income, and account statements showing proof of your down payment. Side note; do most of you have your SIN number memorized? This is a problem for me! I'm usually good at remembering numbers (my credit card, phone number, etc.), but cannot seem to get my SIN to stick in my brain. 

Now, getting pre-approved for a mortgage is great and definitely the way to go, but it does not guarantee that the bank will give you the funds for the house you want. There are certain situations where the bank will reject your final approval. Reasons for this can include a change in your financial position or an appraisal coming back at a lower value than your offer. To prevent this, you'll want to avoid doing anything that will change your financial situation such as taking on more debt or changing employment (if you can avoid it obviously). 

Not everyone gets mortgage pre-approval, but I think it's an essential step before you start seriously looking for a house. It's relatively straightforward and won't cost you anything but will give you peace of mind knowing that the homes you are looking at are within your budget. 

Check out the other posts in this series: 

1. Home Buying Series - Renting vs. Buying
2. Home Buying Series - Saving Your Down Payment
3. Home Buying Series - Home Buyer's Plan (HBP)
4. Home Buying Series - Mortgage Pre-Approval
5. Home Buying Series - House Hunting
6. Home Buying Series - Closing Costs

Getting pre-approved for a mortgage