This post was commissioned as part of a pilot program at Rags to Reasonable. In an effort to both support artists and gather financial resources and stories, R2R is offering money for content (written, visual, or video).
If you’re interested in pitching an idea fill out THIS SHORT FORM.
After 2 years of experiencing the blissful (illusion of) financial security that accompanies a gig with a young artist program, my first step back into the self employed reality of Toronto was….at the bank.
(God help you if you ever have to move your financial life out of Québec.)
I was sheepish about the small “fortune” I had saved over those 2 years, and was feeling slightly humiliated knowing I would have to cut my automatic savings down to the bare minimum without the security of a regular paycheque. While I asserted the posture of starving artist, and filled out numerous transfer forms, I apologized (to this stranger!) for how little I had saved, assuming that his other customers were clearly more valuable than me: salaried with gobs of money to spend on opera tickets. The bank employee just shook his head and said,
“Don’t be fooled, often, it’s the people who make the most money that have the worst financial habits. If Bay Street crashes, you’ll be the one buying those high rollers lunch.”
Hmph. Who knew?
While almost all of my artist clients assume the same starving artist posture; apologizing for “meagre” earnings and savings, I’m here to tell you, in black and white (or whatever colours Chris choses for this post) that your starving artist assumptions, and apologies, have no place here.
ASSUMPTIONS ARTISTS MAKE ABOUT THEIR HOME BUYING POTENTIAL:
- We don’t earn enough.
- We haven’t saved enough.
- We haven’t checked, but we’re pretty sure our credit is bad.
- There is only “one” way to qualify for a mortgage, right?
- We won’t be approved because we’re self employed.
- Our bank said, “No” so, that’s it, we can’t buy.
- We think we need to wait to see what the market will do before we buy.
- The media says, “It’s impossible to buy a home, anyway.”
THE HOME BUYING REALITIES FOR (most) ARTISTS
- You have earned enough. Remember, it’s not just about how much you make, it’s about what you’ve done with those earnings.
- My artists have saved more for their down payment than my salaried clients, even though they make much less.
- My artists have EXCELLENT CREDIT (in the 800’s) because they don’t spend money that isn’t theirs and pay their bills on time.
- There ARE more ways than one to qualify you under the category of self employed.
- You won’t know if you qualify until you actually apply…which is FREE.
- I work with 31 lenders, not just one bank. There are more options than you can imagine.
- You may not need to wait, you may need only to change your expectations.
- People, if I had listened to the media, I wouldn’t have a house.
THE THINGS YOU’D NEVER ASSUME WOULD AFFECT YOUR HOME BUYING POTENTIAL
DOUBT is probably the biggest roadblock to home buying success. Don’t lose out on opportunity due to self doubt, indecisiveness, lack of communication with a partner, or inflexibility. Instead, take a deep breath, trust the professionals guiding you, and enjoy creating your future. I was nervous, too, when I first bought my home, but I trusted my team, my hubby and I were on the same page, and we ended up with the first property we laid eyes on. If you allow your money issues to take over, your numbers will no longer matter. Sounds corny, but totally true.
TAXES. I can’t stress this enough: please have a tax professional prepare your taxes. Every inconsistency in filing (that’s code for: the lender won’t like this) has been the result of a family member, or the client themselves, assuming that their filing technique is going to make sense to a lender when you are asking for hundreds of thousands of dollars. We can discuss this directly, it’s that important, but know that it can take up to 2 years of filing consistently before a lender will look at you. I’m not kidding, there’s no quick fix for this and it is entirely avoidable.
HONESTY and TRUST. I love you, you’re awesome, you’re fun to work with, and I’m 100% on your side but, you need to help me, help you, and avoid padding your financial resume in our conversations. Sorry, time for the tough love, kids. Lower income, and savings that I can prove, are easier to qualify than discussing money that only exists in future projections or promises expressed in the present tense. I know you’ve worked hard, I know it doesn’t always look that way on paper, and you may feel the need to justify things a bit, but, I AM you, remember? You don’t have to prove anything to me, but you DO need to work with the system in black and white to win at the real estate game.
GIFTS. Yes, buyers are allowed parental gifts, but don’t assume that that rule will apply to you. It’s different for the self employed and, to give you the most options, we might need a little head way to get that money working for you in advance. I won’t get into it here – it’s a blog unto itself – but not all gifts are created equal.
MONEY SAVED in SOMEONE ELSE’S NAME. On a similar thread, if you say you have a money in a savings account, but it’s under the name of a family member on your behalf, we may not be able to use it at the moment we need it. To be safe, deposit any money designated for you and let it sit in your name for over 90 days. You’ll avoid a lot of unnecessary stress.
IMPULSIVENESS. “I assumed it would be ok if I just _____________.” If you ever find yourself starting a sentence with this line when referring to a real estate transaction I can assure you, 9 times out of 10, it will not be ok. Before you assume that the drastic move you’re about to make with your money is ok, ASK ME FIRST. My clients can confirm that you’ll have your answer within the hour.
BASING DECISIONS on WHAT YOU ASSUMED SHOULD HAPPEN WHEN YOU BOUGHT A HOUSE. Get the facts. The mortgage industry changes every day, I can barely keep up! There are a handful of drastic new rules, and some of the rules may, or may not apply to you. Don’t base the biggest financial purchase of your life on the things you thought you knew. You wouldn’t arrive at a gig “kind of” knowing the story. The same rule applies here: go to a coach to get yourself in great shape, and reap the rewards when the curtain goes up!
Being an artist is already an (awesome) challenge, and there are very few financial professionals who can relate to what you do (*cough*cough* except for me and Chris *cough*cough*) so, let us help you with your financial gigs, so that you can focus on your art.
Paying it Forward. Instead of Chris paying me for my blog post, I will be donating my fee back to the site to support R2R’s new mission of providing financial planning to low income earners. You can learn more about that mission HERE.
Marcia is a prairie girl mezzo obsessed with music, money, and mortgaging your first home.
To read more of Marcia’s blogs, go to TheCardinalsNest.ca. If you think you might be ready to start the mortgage process, visit CardinalMortgages.ca, or email her directly at email@example.com.
Not ready to invest? Then join Chris for his free FRIDAY 1/2hr skype sessions to get the ball rolling.