Interesting and concerning report below this week, regarding mortgage fraud in Canada.

Nearly half of Canadians think mortgage fraud is common, some are willing to to do it: survey

In high-priced markets like the Vancouver and Fraser Valley areas, people have been willing to do some extreme things to secure a mortgage and buy a home. The fear of missing out (FOMO) during the pandemic era housing boom, was an emotional time period for home buyers. Some choices were made that might now be haunting some home buyers. That is because mortage rates have risen rapidly and have hit those with variable rate mortgages the hardest. Those renewing are also being impacted. Moreover, price increases reversed into price decreases in most housing segments and markets.

Stretching a personal or family budget to purchase rapidly escalating homes was seemingly quite common. However, it is usually not a good idea to over-extend or stretch oneself financially thin to secure high priced property. Living in the Metro Vancouver area is expensive enough, excluding housing.

We have relatively high prices for things like fuel (gasoline), vehicles, food, insurance, etc. When you layer on high mortgage payments, against the relatively low wages in B.C. compared to other places, this can cause financial fragility. Unexpected illness, a family emergency, job loss, divorce etc. are examples of unexpected life events that can upend peoples' financial lives. This is particularly true for people living on the financial edge, that have little wiggle room.

When working with buyer clients, I suggest they take a holistic view of their financial picture, including realistic earning projections and normalized monthly expenses. Although the article shared above discusses some home buyers that inflate or falsify their incomes, this is problematic. Although these people might be able to fool a lender, at the end of the day, they are simply fooling themselves. The math of a homeowners income statement and balance sheet is what it is. Money doesn't magically appear after buying a home, to effectively make the numbers work or bridge a financial gap. Quite the opposite. There are always unexpected maintenance and repair costs that arise and that you need an emergency fund for.

Stress related to debt payments is a real threat to one's mental and physical health, as well as household relationships. Peace of mind and the ability to sleep easy is priceless. The way to achieve those things is to maintain financial balance and buffers. Committing fraud or lying to obtain financing is full of risk. An honest assessment is the best approach instead.

Purchasing a home within your means, where you can comfortably afford it, is a more sustainable path. Living within one's means isn't always popular, but it increases the chances of you being able to comfortably carry and maintain your home. The alternative could be a homebuyer inevitably having to sell in distressed circumstances.

If you are a home buyer looking to buy an affordable home, that fits your budget, there are options in Metro Vancouver and especially the Fraser Valley. Connect with me today to discuss listings that might fit your criteria. I can help connect you with a mortgage professional that can help you understand and stay within traditional debt-service affordability ratios, that will help minimize risk to your financial health.

It is one thing to buy a home. It is quite another to be able to financially carry it for the long-term in a sustainable way.

Buying your first condo apartment, townhouse or detached house can be an overwhelming experience. There is so much to consider. Buying a home is usually the largest financial purchase a person makes in their lifetime. For first-time home buyers, it’s the first time they are ever dealing with such a huge financial commitment. That is why in housing markets that are expensive places like Metro Vancouver and the Fraser Valley, it is important to avoid making major mistakes as a buyer. They can be costly!

Here are a few things I would advise my homebuyer clients in the Fraser Valley markets of North Delta, Surrey, Langley, Cloverdale, Abbotsford and Mission, to carefully consider when buying their first home.

USE A BUYER’S AGENT

The homebuying process should include starting by getting in touch with and interviewing a professional REALTORⓇ like me. Having the expertise and assistance of a buyer’s agent is a way to set yourself up for a smoother, easier and less stressful buying experience. A buyer’s agent has a fiduciary responsibility of confidentiality, utmost care and loyalty and follows a Code of Ethics. 

This agent will inform you of essential facts that are affecting current market conditions, while maintaining and protecting your best interests. Moreover, a buyer’s agent will help discover facts relating to a property to avoid the potential of error or misrepresentation. Just as important, your REALTORⓇ walks you through the legal paperwork of the contract of purchase and explains terms and conditions in clear, simple and understandable language. This can be comforting to fully understand exactly what you are contracting to.

ADDITIONAL COSTS OF ACQUIRING A HOME OR PROPERTY

First-time homebuyers may be unaware of some of the hidden costs of home ownership. The costs associated with buying a home go beyond just the purchase price. When it comes to closing costs, it has been suggested that 1.5% to 4% of the purchase price should be budgeted for. Costs that are often overlooked when it comes to budgeting for one’s first home include: 

• Property Transfer Tax (PTT)
• GST (on new homes)
• moving costs
• Legal or notary fees
• Home inspection fees
• New furniture and furnishings
• Renovation or repair costs upon move-in

STAYING WITHIN A REASONABLE BUDGET

Taking on a larger mortgage than you can handle by paying too much for a home can be regrettable and have long-term negative consequences. Purchasing a home is one thing. Maintaining and carrying it over a long period of time is a different matter. A home buyer should carefully approach a home purchase with an eye to being in the home on a sustainable financial footing.  Sometimes, emotions can get the better of purchasers in hot markets where bidding wars breakout and/or the fear of missing out (FOMO) takes hold. Logic, and not solely emotion, must prevail when making the biggest purchase of your life! Again, this is where a buyer’s agent can help.

Be honest in making an assessment of your affordability threshold or budget. Genuinely take into account lifestyle factors that are important to you, such as dining out, traveling or taking weekend getaways. If you have kids, you need to consider costs like daycare or after-school programs. Are you a commuter? Then you need to factor in your fuel and other vehicle maintenance costs. In other words, take a global view of your finances.  Your lender will give you a qualifying monthly payment. However, you need to think about what your preferred monthly payment will be so you can maintain other financial obligations. Also, try to leave some wiggle room in the event of an emergency. As with all things in life, BALANCE is important when it comes to how much home to buy.

I CAN HELP

Working with a professional like me from the outset of your home buying journey can certainly help you feel more prepared as you start working on this exciting milestone. I take the time to really get to know my clients and their housing needs and wants. I structure a process that makes researching, viewing and preparing offers on properties a breeze. I can answer your questions accurately and provide sound advice. Plus, I’m helpful in ensuring that your homebuying plans stay within a budget that works well for you and allows you to sleep easy at night, in your new home.