by Todd Lewys
With spring on the horizon, many people are looking at the possibility of buying a home.
In previous years, the buying process was relatively straightforward; not so in 2017. With recent changes to CMHC debt-to-income ratio rules, a new federal government-imposed “stress test,” and rate increases from mortgage lenders due to take effect on March 17, the process is no longer straightforward.
More than ever, buyers need to know exactly what they’re dealing with in order to successfully purchase a home.
Accredited Mortgage Professional (AMP) Marty Coubrough said the reality is that many consumers — particularly first-time home buyers — aren’t properly educated about all the nuances of the buying process before they head out to purchase a home.
“We’ve been finding that many lenders (i.e., banks) aren’t explaining the process to first-time buyers very well,” he said. “First-time buyers need to be made aware of things like closing costs, penalties, stated income and what you can and can’t do with your credit (i.e., car loan) when you’re planning to purchase a home. In a lot of cases, banks often put junior people up front, and they don’t properly educate first-time buyers. Some assume that closing costs are $350, and that’s because they haven’t been properly educated.”
Coubrough added that another issue has been cropping up,
this one the responsibility of REALTORS®.
“In many cases, Realtors aren’t pushing hard enough for their clients to get pre-approved (for the purchase of a home), not just pre-qualified. Some people are out looking for a home, and they’re not pre-approved. That happens more than it should.”
That’s why it would be a good idea for Realtors to have a defined routine in place to get clients ready to deal with the complex process of buying a home, said Winnipeg-
REALTORS®’ 2017 president, Blair Sonnichsen.
“I believe the first step in the process should be for purchasers to connect with a Realtor to discuss their purpose, and the process involved in buying a home,” he said. “In addition, they should discuss the process of qualification with their Realtor – including confirmation of down payment, deposit and verification of income. They should also arrange to meet with a financial services company to confirm their ability to properly enter into negotiations in buying a home.”
At the same time, buyers should ideally sit down with their Realtor
to determine the timeline of their
“Buyers need to meet with a
Realtor to clearly determine the process — are they looking at buying now, or six months down the road?” said Sonnichsen. “Ideally, a Realtor should show clients sold properties in the price range they’re looking in to show them what market conditions are. That will enable them to negotiate from a stronger position of understanding because they will be a well-informed buyer.”
He added that there’s one last detail that would be a good idea to cover.
“Buyers need to discuss the buyer service agreement with their agent — it engages a Realtor’s services to a purchaser. It’s important that buyers and sellers contact a
Realtor for more information. As well, I believe this is a process that Realtors could incorporate to make for a smoother process.”
Coubrough said the key to making that process as smooth a possible is for buyers to use readily-
available resources, namely mortgage brokers and Realtors.
“Buyers need to come in and talk to us to find out exactly where they’re at,” he said. “You need to take care of all the details at the front end, not the back end. By getting educated, you’ll understand what’s going on. That allows you to be comfortable and confident. That will allow you to navigate a complex process that much more smoothly.”
Mortgage broker Ed Leblanc said it’s essential to get educated by knowledgeable brokers and Realtors prior to embarking on the purchase of a home.
“The main thing is to work with someone who will make sure you know exactly what you have in front of you,” he said. “That way, you’ll be ready to go when you make an offer.”