Yes, I Am Cheap

Author: Tahnya Kristina

  • How Do You Know You’re Getting Good Financial Advice?

    How Do You Know You’re Getting Good Financial Advice?

    Good financial advice can mean different things for different people. For some it means being able to get a hold of your financial advisor at any time, for others it means finding an advisor who explains investment options in detail and for some good financial advice equals making money.

    The truth is a good financial advisor has several beneficial qualities and giving good advice is one of them.

    The advisor listens to your needs

    There is nothing worse than a financial advisor who gives blanket advice because it makes the client feel undervalued. Personal finance is personal for a reason – it should be tailored to each individual client’s needs and goals as well as their unique situation.

    A good financial advisor listens to your needs, addresses your concerns and explains the difference between all investment options.

    Your meetings are a two-way conversation

    Good financial advice comes from the advisor understanding your financial goals, comfort with risk and time horizon for investing. This information comes from having conversations.

    As a financial planner, I like to spend the first part of all meetings letting the client talk about why they booked an appointment and what they want to achieve. Sometimes the goal is paying off debt, sometimes it’s saving for retirement and sometimes it’s build wealth and invest wisely. Whatever the reason, it’s hard for advisors to give tailored advice if they don’t take the time to understand what the client wants.

    You understand how you’re invested

    So often people think good financial advice means increasing their bottom line. Choosing the right investment options is a part of receiving good financial advice, but it’s not everything. The question to ask is, what is the right investment option? Well if we knew that we would all be financial advisors.

    Choosing the right investment option is not buying a stock today and selling it tomorrow at a huge profit. That’s not what financial advice is all about. That’s the job of a stock broker, not a financial advisor. An advisor focuses on your entire financial life, not just the next big thing.

    You’re comfortable with the risk

    How do you feel when you look at your quarterly account statements? If you’re upset at the bottom line that is one thing – but remember no one can predict what will happen in the market from day to day. However, if you’re uncomfortable with the risk of the investment options a.k.a. the level of fluctuation in the type of investment then it’s time to book an appointment with your financial advisor.

    Good financial advice is pairing the correct asset allocation with your risk tolerance. If you’re risk-adverse, lower risk investments such as fixed income and bonds may be the best options. You won’t make a huge profit, but you’ll also have the peace of mind that the value of your account won’t experience huge fluctuations day to day.

    So, let’s get back to the original question, what makes good financial advice?

     

     

  • Do You Apologize for Your Wealth?

    Do You Apologize for Your Wealth?

    Do people with money usually flaunt or apologize for their wealth? This past week one of my good friends lost her job. As it goes in the financial industry when times are tough and companies need to increase their profit margins. She (let’s call her Amanda) has over 10 years of experience and is college educated so I don’t think she’ll have any trouble finding a new job. However, the period of uncertainty is unsettling for her, her relationship and her bank account because let’s be honest money troubles can be a major source of stress.

    If you had to live on less, could you?

    Amanda’s husband has a good job and makes approximately the same amount of money as her per year which is $75,000 before taxes. As she was telling our circle of friends about her two week notice she confessed her concerns about living on one income and I felt like some other women were money-shaming her.

    I think income is all relative and cutting a household income in half is a big adjustment, whether is $155,000, $75,000 or $35,000 per year. I don’t feel that anyone should apologize for your wealth, especially since it’s yours and no one else’s.

    Don’t apologize for your wealth, you earned it

    Yes, $75,000 per year is more than some families of four live on, but that’s not her fault, nor is it truly relevant. The fact is she is about to lose half of her income and that can be terrifying. Amanda didn’t take a year off after graduation to travel like so many college students do. She worked hard and landed a full-time job right out of college so she could start gaining experience in the work force.

    Amanda has always been determined and she’s had a clear career path ever since we met in the second year of college. All this to say that her life choices helped her get where she is today, so should she apologize for that?

    Wealth inequality can be stressful in a relationship

    If Amanda does find herself without income between jobs it will set off an imbalance in her relationship and that can be stressful. When the financial burden of being head of household lays upon one person’s shoulders it can create tension between the couple. Although the lack of contribution will hopefully only be temporary, it’s a lot to ask of someone.

    The other side of the coin is for Amanda to dip into her personal savings. This would allow her to continue contributing towards the household expenses, but it will cut into her retirement savings fund. I’m not sure which of the options is the lesser of two evils: does she allow her husband to take 100% responsibility for the day to day family finances including credit card payments or does she withdraw money from her nest egg?

     

     

  • We all love a good freebie, but are they really worth it on your phone deals?

    We all love a good freebie, but are they really worth it on your phone deals?

    It’s all written in big, black unmissable letters: a new nifty looking phone with a tempting looking piece of tech for a price that doesn’t seem over-inflated or outside of our budget. But stop, take a step back and think for a second before you sign up to anything. What looks cheap might not be the cheapest way of getting what you need- there’s some book-keeping that has to be put in order before you can be certain that you are saving money and your deal is worth having.

    Do You Save: Short Answers

    There is a short answer here which is good advice generally, but not individually. No doubt you have already guessed, but the deals on offer are set up by the mobile companies trying to gain customers. They have overheads and profit margins to chase, so ultimately their deals are not going to offer us something for nothing. So no we probably don’t save.

    However on an individual level the answer could be quite different. A tech bundle might well save me money on my current contract and meet my needs better than what I currently have. As such the best starting point is working out where I am at and how that can be improved on.

    Be a Self-Aware Consumer

    What is most cost effective depends on you as a phone user and what provides the best service for you. Some people are happy to own the same phone for years without looking to upgrade; others like to own the latest tech; still more find it almost impossible to go two years on a contract without losing, damaging or otherwise being unable to keep hold of their phone. In addition there are those of us for whom mobiles are a last resort, others for whom they are a handy tool and others still who seem to have their phone permanently attached to their ear.

    So start here: the first thing to do is to know what you need. Do you actually need a new phone and the tech that comes with it? Does a new device need to be compatible with other devices you own or are you happy for something on a different platform? How much storage are you likely to need and can you expand storage if necessary? How many minutes/ texts do you use and does the deal offer you enough? In order to shop smart and get the best deals us consumers need to think about what we want our new phones and tech to provide. Once this is decided it is easier to work out what will benefit us most

    Ways to Save

    Let’s take that new found self-awareness and now apply it when looking at that unmissable deal. If what is on offer will leave us financially better off without making us cut back on our current mobile usage then it’s a saving, and if we get something thrown in to sweeten the deal then all the better! If the complete bundle including the tech works out cheaper than our current deal and buying the tech then it is still a saving.

    There are two ways that the bundle can bring us value. Either it will enhance our lives and give us something worth keeping or it is something which is not valued by us but which is valued by others and can be sold on. This then can reduce the costs of the package: selling on a tablet for £120 reduces the overall contract costs by £5 a month on a 24 month contract.

    Do You Save?

    As in everything if we are deal savvy and shop around it is highly likely that we will find a deal that saves us money. However that doesn’t mean that with every deal we definitely will save. Before we make any decisions we need to consider what our needs are and whether our unmissable deal will meet these in a meaningful way. Good advice for life in general is to engage our brains before opening our wallets. This way we can best ensure that we do save money.

  • How to Find a Good Financial Advisor

    How to Find a Good Financial Advisor

    Let’s be honest, your money is the product of your sweat and tears – and sometimes your blood. I think it’s safe to say that you want to find a good financial in whom you have complete and total trust. But how do you do that? The process is easy, it starts with the internet and ends with an interview – yes you can do that.

    Here are four ways to find a good financial advisor:

    Search for financial advisors in your area

    A Google search is the quickest and easiest way to find financial advisors in your city. If you want to get super specific you can even add in an area of expertise that you’re looking for such as Financial Advisor, Brooklyn, Millennials. This is the base of your search. From here you can create a short list based on their location, description and the information you find about them online.

    Google will return results based on (among other things) the relevance to your search and the popularity of the website (also known as the authority a.k.a. legitimacy) as well as how up to date they are. Regularly updated websites will usually rank higher in Google. I would choose five financial advisors to start. It’s important to note that the top results with the word AD to the left have paid to be seen at the top of your search results.

    Check them out on social media

    From the five financial advisors you chose, narrow it down to a short list of three advisors based on their online presence. Have a look at their website and see if you get a good vibe. Take a look at their biography and see if their area of expertise aligns with your goals (such as buying a new home or saving for retirement) and ask yourself if their product offering meets your needs. Look up the financial advisors on LinkedIn and see if you like their overall presence and if the content they’re sharing is relevant to the type of services you need.

    Ask about their credentials and education

    Now it’s time to initiate personal contact. Send an email or give the advisors a call, this will give you an idea of what their level of customer service is like. If they get back to you within 48 hours, it’s a good sign. If your call or email goes unanswered for several days, it’s a big red flag.

    Once you are in contact with the three advisors on your short list, have a phone conversation with them and ask about their designations, credentials and education. Ask if they operate with a firm, ask where they are licensed and which designations they have i.e. securities dealer, life insurance and financial planner. I don’t know about you, but I wouldn’t trust just anyone with my hard-earned money. I would like to know (if I wasn’t a financial planner myself) that my money is being managed by an experienced professional.

    Meet them in person – at their office

    Talking with a person can give you a good idea of whether your personalities match and an idea of how the general working relationship will be. Narrow your short list down to two advisors and book appointments to meet them in person. It’s preferable to meet them at their office to ensure the operation is legit. Be open with them and ask questions about service expectations and fees. After meeting with them, take all the information home and follow up with them in a few days. It’s never a good idea to make an on-the-spot decision when it comes to your money.

    And voila, you just found yourself a good financial advisor.

  • How to Stop Being House Poor

    How to Stop Being House Poor

    Being house poor is a common factor among home owners – specifically among new home owners. Have you ever heard someone say “I can’t go on vacation for at least a couple of years because I’m buying a home” or “I’ll never be able to go out for brunch again after I buy the house”? That’s being house poor. It’s the idea of putting every cent you have into your new home to make it perfect. The idea is great because everyone wants to live in a beautiful space, however financially it’s not very practical.

    As a soon-to-be first time home buyer (yes, we finally closed and we move in at the beginning of August) I am learning just how much it costs to buy a house, especially a newly constructed house. Although this is the biggest purchase I will ever make, I keep promising myself that I don’t want to be house poor. I know that my lifestyle will change once we buy a home, but I don’t want to feel financially restricted. If I can avoid it I’m going to do everything in my power to keep from being house poor.

    Here are tips to budget wisely for your home and avoid being house poor:

    Be realistic about furniture and décor

    It’s a nice idea to want your house to be perfect the day you move in. However, it’s not very realistic. When you rent an apartment all you need to worry about is décor; when you buy a house, you need to prioritize furniture and functionality over things that look good. We have savings for necessities such as blinds and a new sofa, the wall mirrors and vases with branches will have to wait.

    Save as much as you can beforehand

    Budgeting is great and as a financial planner I fully support smart saving, but the truth is we can never plan every single cent – especially when it comes to buying a home. Avoid being house poor and racking up debt (in addition to your new mortgage payment) by saving as much as you can before you move in.

    After the down payment is saved and your mortgage is approved, it’s time to start stacking cash for all the extras that come with buying a new home such as moving expenses, notary fees, add-ons to faucets and fixtures as well as minor improvements for convenience such as no-slam kitchen cabinets. Yes, those are a thing, and trust me you will be happy you upgraded.

    Only offer the minimum down payment

    One of the smartest things we did to avoid being house poor is only offering the minimum down payment required. We kept some of our savings for unexpected costs and items that you don’t know you need until you buy your first home. Did you know that new homes don’t come with grass or a driveway? We have a garage, but no driveway and a deck with no grass.

    If we don’t spend the rest of the savings on the house, we’ll keep the cash in an emergency savings fund. I feel much better about making the financial commitment of buying a home knowing that we won’t deplete our savings account to do so.

  • I’m Getting Evicted!

    I’m Getting Evicted!

    Not too long ago I was happy to tell you that at 36 years old I’m buying my first home. It’s a big milestone in my life and I’m looking forward to leaving the city and moving to the suburbs. Within a little bit less time than that, I shared my nightmare story of how disruptive it is living across the hall from and apartment being continuously rented on Air BnB. Since then there has been a new development in my living situation…I’m getting evicted.

    Last week we received a letter from our landlord offering compensation for previous water damage ONLY if we vacate the premises by April 30. If we do not leave the apartment by that date no compensation will be offered.

    There are two problems with this: 1. I can’t leave the apartment in the next 30 days because our new house won’t be ready and 2. I confirmed with the rental board that a compensation offer can’t alter the lease. So now what? Now we need to fight to stay in our apartment until the lease ends on September 30th – which technically is our right.

    What to do if you’re getting evicted:

    Notify your landlord of the situation

    When I consulted with a lawyer the first thing he advised us to do is communicate with the landlord. It’s important to do this in order to understand the situation and the asks as well as start the negotiation process and hopefully find a solution that best suits both parties.

    It’s best to do this via a registered letter because email communications and text messages may not be admissible evidence in a court of law – if it gets escalated to that point. Check with a local expert to find the best form of communication.

    File an official claim at the rental board

    If the landlord does not respond to your communication or if an agreement is not reached, the next step is to file an official complaint with the rental board. Before doing so it’s important to have all information on hands such as dates of events and previous communications as well as your desired outcome (i.e. the reason for the complaint) and the amount of any damages.

    This includes the total amount of compensation, including court costs. Your landlord will receive a copy of this, therefore it’s important to be very clear in all of the details.

    Open the door for negotiation

    This wasn’t an official piece of advice from the lawyer, but I gave my landlord one last chance to negotiate before going to plead our case in front of a judge. Filing a case in court shows the landlord that you’re serious and they may be more willing to negotiate then they were upon first notice via registered letter.

    Plead your case in court

    If an agreement can’t be reached the last step is to plead your case in court. Tenants can represent themselves or they can hire a professional to help present the case. By the time you go to court, it’s important to have all the facts including previous court case rulings, specific legislation clauses (i.e. violations of the lease laws), and all references from previous communications with the landlord.

  • Why I Hired a Real Estate Agent on Twitter

    Why I Hired a Real Estate Agent on Twitter

    I know that sounds crazy, I mean who does that? Not a sane person, that’s for sure. But give me a minute to explain and trust me it will make sense. Who knows, next time you need a real estate agent or financial advisor you may just take to Twitter to find the perfect match. This is why I hired a real estate agent on Twitter.

    I am in the middle of buying a new home – we’re going to make an offer next week – and to say I’m excited is an understatement. There is a lot to buying a newly constructed home and if I didn’t have a professional by my side I wouldn’t even have known where to start.

    Three reasons why I hired a real estate agent online:

    We had something in common

    When buying a new home, it is so important to find an agent who clicks with your personality, otherwise, the working relationship can quickly turn into a total disaster. I first met Jen @JenRealtorMTL about a year and a half ago while we were both tweeting about The Real Housewives of Orange County.

    We chatted online whenever a new episode of The Real Housewives aired and when I was ready to buy a home and needed to hire a real estate agent she was my first call. Of course, we met in person before signing a contract and I semi-interviewed her over coffee at Starbucks, but from the get-go, it was obvious we would work well together.

    She was online

    As a social media consultant, I appreciated the fact that Jen was online and promoting her business. She was doing everything that I teach clients to do. She was making connections with her target clientele (i.e. in our city) by finding common ground. It’s always easier to reach out to someone who you don’t know when you have something in common.

    To be honest none of my friends own a home here so I wouldn’t even know where to find a real estate agent if it wasn’t on social media or through a Google search. A lot of business can be lost if you don’t have an online presence.

    There’s open communication

    From the very first meeting, I had a good feeling about Jen. We had open communication and it was easy to talk to her. She didn’t pressure us to make a quick sale and she took the time to understand our needs.

    Although I found the model homes and new developments to go visit, it was her show all the way once we were in the door. She made recommendations on which features were worth the cost and what potential buyers look for when it comes to resale value. She asked questions that I wouldn’t even have known to ask and since I don’t have any family close by, I appreciated her expertise and knowledge.

    Have you ever hired a real estate agent (or any professional) on social media?

  • Should You Seek Professional Financial Advice?

    Should You Seek Professional Financial Advice?

    Professional financial advice is a very valuable tool. So why don’t more people seek money management help from the pros? I spent nine years working as a financial planner and I can tell you that the two main reasons why the majority of people don’t seek professional advice are because 1. They don’t think they need it and 2. They don’t want to pay for it.

    My answers to that are simple: 1. Everyone can always be better and sometimes a second pair of non-biased eyes can make the world of a difference and 2. Since when do consumers receive something (i.e. a service) for nothing?

    With that being said it’s true that not every single person in the whole world needs professional financial advice, however, most people (regardless of how much money they have) can benefit from talking with a professional.

    Here are 3 life events when it’s time to get professional financial advice:

    You get married – or divorced

    Marriage – the beginning or end of – can really wreak havoc on your finances. All of a sudden you can find yourself living on one income and it’s safe to say that adjustments need to be made. Learning to live on one income requires a new retirement plan and a new monthly budget. Advice from a financial professional can help paint a clear picture of your financial situation after a divorce.

    A common question from newlyweds is “Should we merge our finances?” Although there is no right or wrong answer because it truly depends on the couple, the days of the man managing the money and making all the financial decisions are over.

    As long as each spouse is contributing equally towards the monthly household expenses I don’t see why finances need to be merged. However, if one spouse is better at managing money than the other a joint account may be necessary, but that doesn’t mean each person can’t maintain individual bank and investment accounts as well.

    Land your first job – or change careers

    A new job – whether it’s your first or tenth – marks a milestone in your life. A new, or newfound, income means setting a new (realistic) budget. Online budget tools such as Mint.com or YouNeedaBudget.com are available to the masses, but sometimes you need a little bit more help with in-person, professional financial advice. A financial professional can help open retirement accounts, choose employee benefits, and allocate your income towards savings, necessities, and fun money.

    Within 10 years of retirement

    In all honesty, I feel that everyone can benefit from retirement planning – whether you’re 25 or 55. However the closer you are to retirement the more planning you need. It’s the time to check in on your goals and see if your savings-to-date will be enough to support the lifestyle you want to have during retirement.

    If the answer is yes, then great. However, if the answer is no there is still time to set and adjust to more realistic goals (such as living on less or prolonging the date) or start saving more.

     

     

  • Should You Buy a New Home?

    I am in the middle of buying a home. We’ve already visited two developments, four houses, three agents and are waiting for final pricing on the home we want to build on the lot we chose. After months of scanning the internet for listings and discussing the pros and cons of our real estate agent, we decided to buy a newly constructed home. We hope to make an offer within 60 days. To say I’m excited is an understatement.

    If you’re in the market to buy a house, did you decide to buy a new home or an already-lived-in home? Here are the three things we considered when deciding to buy a new construction versus an old home:

    A price we can afford

    We searched listings for months before deciding to buy a new home and visiting the developments. There were a lot more options for newly constructed homes than there were for older homes. We knew the general area where we wanted to live but had no idea about neighborhood amenities. That can only be determined by visiting the homes on site.

    Although model homes are pretty much standard, homeowners can make small adjustments to the layout and fixtures at no extra cost. This was a big plus in the debate of new versus old.

    The upkeep and maintenance

    For the past 15 years, we have lived in an apartment with a landlord and maintenance staff who assist with all of our needs.  To say that neither my husband nor I am handy would be an understatement. We decided that even though buying a used home may be cheaper, after the costs of renovations the smarter economical choice was to buy a new home.

    Professionals such as plumbers and electricians are expensive – and they charge by the hour. Newly constructed homes come with a new structure, new finishings, and a warranty from the builder.

    Making it our own

    If we purchased a home from another couple or family we would need to spend additional money to make it our own when it comes to decor. A builder allows buyers to choose the color scheme throughout the new home such as flooring, kitchen cabinets, countertops, and paint on the walls.

    As long as the materials aren’t an upgrade, all personalization is included in the cost of the purchase price. This saves new homebuyers a lot of money and it was one of the factors in our decision to buy a new home.

  • Why I Hate Air BnB

    Why I Hate Air BnB

    There are several reasons to love Air BnB if you’re a homeowner – unfortunately, I’m not a homeowner yet and I hate Air BnB. It’s a great way to earn extra income by renting out your unused space – if you don’t mind strangers in your home. It’s also a way to ensure some type of income if you’re a landlord who is unable to rent your apartments on a full-time basis. Finally, Air BnB is what we call an at-will income stream; meaning you have the flexibility to rent out – or not rent out – your space as needed. However, as a tenant, I have to tell you that I really hate Air BnB.

    There are five apartments in our building and for the three years, we’ve lived here only two have been rented out. That is until Air BnB showed up in the picture. Now there is a woman who is not a tenant in our building renting out the additional three apartments on Air BnB. As a tenant this is a total nightmare and here’s why.

    3 reasons why I hate Air BnB:

    Broke and low budget travelers

    People rent apartments on Air BnB because they can’t afford – or don’t want – to pay nightly rates at a hotel. That’s a major red flag. What exactly is it that these travelers are doing in an apartment that can’t be done in a hotel? Or here’s a better question, if you can’t afford to travel why are you doing so?

    The people who rent out the Air BnB apartments in our building are using them to throw parties. Loud music and a lot of people yelling into all hours of the night are extremely inconvenient for long term tenants and homeowners.

    Rental boards have no regulations

    I know that some cities have outlawed the use of Air BnB, but unfortunately, my city (Montreal) is not one of them. I called the rental board to file a complaint about random strangers living in our building on a revolving door basis and the response was less than helpful.

    The official answer was that Air BnB is a new commodity and therefore there are no rules, regulations, or precedent cases in rental court. The officer advised we could file a complaint in court but wasn’t sure what the outcome would be since there is nothing in our lease permitting or banning the use of Air BnB.

    Living with strangers is unsafe

    The turnover with rentals in our building is about twice a week and it’s a major reason why I hate Air BnB.  This means that any given week there are four to twenty new people coming into and out of our building. When you sign a lease, there are extensive background, credit, and employment checks that need to be done.

    That is not the case with Air BnB. These people are here on a temporary basis and therefore have no loyalty to keep the peace with neighbors or take care of the common areas. To say that I’ve been worried about my safety more than once is an understatement.

    Do you love or hate Air BnB?

  • 4 Questions to Ask Your Real Estate Agent

    4 Questions to Ask Your Real Estate Agent

    As you know I am in full first time homebuyer mode. I spend my weekends searching for websites to find homes with all the amenities we want, at a price we can afford and sending questions to our real estate agent. Notice that I said, I spend; not my realtor spends.

    I know that I’ve never bought a home before, but I’m pretty sure the client isn’t supposed to be doing the work. If you’ve bought a home did you search for homes with your real estate agent or did they bring listings to you?

    To be honest I thought that I would find a real estate agent, give them our list of must-haves and they would come back to us with available properties that meet the criteria. Is that not how it works? Currently, we’re searching online for homes that have everything we want and in a couple of weeks, we’ll start visiting homes. Our wish list includes:

    • Garage
    • New construction
    • Finished basement
    • Single-family home (no condo or townhouse)

    Here’s a list of questions to ask your real estate agent when buying your first home:

    How much down payment do I need?

    The mortgage amount, interest rate, and pre-approval are based on a variety of factors including your credit score and the amount of the down payment. Although a real estate agent isn’t a mortgage broker they do have a basic knowledge of the process.

    The real estate agent will be able to give you an idea of the type of home you can afford based on your wants vs. market availability. Don’t be afraid to talk about finances with your real estate agent because it can help the process be more efficient.

    Do I need a home inspection?

    The answer to this question is yes – except when buying a new home. Apparently, a newly constructed home is evaluated for the purchase price and land tax payment, but it doesn’t need to have an official home inspection because all guarantees are offered by the builder with the purchase.

    If you’re buying a used home, our real estate agent absolutely recommends getting a home inspection. It helps spot imperfections and lets homeowners know what they’re getting into when it comes to repairs and renovations.

    Do some builders have better reputations than others?

    The answer is also yes. If you’re purchasing a new home it’s a good idea to research the builder and their reputation, including previous projects. Your real estate agent may also have an established relationship with certain builders and that can work in your favor when negotiating.

    What questions did you ask your real estate agent?

  • 5 Questions to Ask Your Mortgage Broker

    5 Questions to Ask Your Mortgage Broker

    What questions did you ask your mortgage broker? As you may remember I’m in the process of buying my first home. At 36 years old I think it’s finally time to make the commitment to buy a place to call my own. You know what they say, better late than never. To be honest, the thought of spending hundreds of thousands of dollars completely terrifies me, but the idea of having my own space (and peace and quiet) is very exciting.

    In two days I’m meeting with a mortgage broker to get a pre-approval. This will give us (my spouse and I) an idea of how much the bank is willing to lend us for a mortgage loan. Although I already have an idea of the purchase price we can afford because I’ve spent countless hours using mortgage calculators and searching For Sale Listings in the area where we want to live.

    Having a mortgage loan pre-approval – also know as the prequalification – is the first step in the homebuying process. From there we can tell our real estate agent the purchase price range and she can begin trying to find our dream home. I’ve come up with a list of questions to ask your mortgage broker before committing to work with one particular agent.

    If you’re buying a home here are five questions to ask your mortgage broker:

    Do you have allegiance to one lender?

    Some mortgage brokers work with only one bank and some others can shop around for the best rates among several different lenders. Our mortgage broker only works with one bank and that’s OK because it’s our primary financial institution. It’s important to find the best rate on the market, but it’s also important to trust and have confidence in the lender.

    When is the best time to buy a home?

    This is a good question to ask your mortgage broker because they can anticipate promotions. We’re applying for the mortgage loan pre-approval now and plan to move May 1, 2017. The mortgage broker advised to use the pre-approval as a starting point and expect rate discounts in the spring because lenders often lower rates to entice shoppers during prime homebuying season.

    What happens if rates drop?

    A pre-approval is based on current rates, but until an offer to purchase a home is made the rate is not locked in or guaranteed.

    Can we make pre-payments?

    The type of mortgage loan you commit to is very important because it sets the terms for the life of the loan. Talk with your mortgage broker about the different types of loans available such as fixed rates and adjustable rates.

    Are fees included?

    There are so many more costs to buying a home than the down payment, purchase price and monthly payments. Homeowners need to also pay for inspection and appraisal fees as well as closing costs i.e. notary fees. Negotiate with your mortgage broker to have some or all of these costs covered by the lender. Inspection, appraisal and closing costs i.e. notary fees.

    If you’re a homeowner what questions did you ask your mortgage broker?