Buying a home can be an exciting and terrifying experience! It might just be your biggest purchase of your life. This means it is so important to understand the process and avoid mistakes that First Time Home Buyers commonly make. Take the stress out of the transaction and enjoy the feeling of excitement and pride for becoming a homeowner!
1. Shopping Outside Your Budget
One of the most important first steps that we always tell our clients is the pre-approval process. Even if you think you're just looking right now, a pre-approval will help you to know exactly where you stand with your financing. It allows you to have a clear idea of what you can comfortably afford. A pre-approval from a Mortgage Broker will help you to know the maximum that you can spend on a house. However, that does not mean you should go out and spend the max of that budget. There are other areas that need your attention (and money) when purchasing.
In addition to ponying up a down payment for that dream home, you need to have additional funds to cover closing costs. Buying a home within your home-buying limit will allow you to be ready for any potential curve balls and to reduce your stress regarding affording the mortgage (and everything else that comes along with it).
Check out our blog post on pre-approvals:
2. Forgetting to Budget for Closing Costs
I touched upon this in the point above; however, not every First Time Home Buyer realizes there are additional costs that you have to pay upon closing in addition to your down payment. These costs can be substantial and shouldn't be overlooked. These include:
- Legal Fees
- Land Transfer Tax (although you may be except from this as a First Time Home Buyer)
- Home Inspection fees
- Appraisal fees
There can also be other costs included depending on the mortgage type and lender. It is always best to check with your broker and get an estimate of what the cost will be. You should assume approximately 1.5% to 3% of the purchase price.
For more information on closing costs, check out the blog post below:
3. Buying a Home on Looks Alone
Are you the type of person that believes in love at first sight? It can be easy to fall in love with a home immediately. Perhaps they've done the kitchen cabinets all in grey (hello - that's your most pinned kitchen look on Pinterest) or it has a gorgeous fireplace in the living room (just like in your grandparents cottage), but buyer beware! Cosmetic upgrades can be great, but pay attention to the *costly* things that matter! Ask questions such as:
- When was the roof last done?
- How old is the furnace?
- How old is the water heater?
- How old is the house itself? How old is the electrical? What about plumbing?
- When were the windows last updated?
4. Skipping the Home Inspection
With the intensity of the real estate market over the past few years, it became quite common for home buyers to purchase a house without putting in a home inspection clause. This is one thing we recommend that you do not skip! This is your opportunity to identify any problems that you cannot see yourself. Problems such as water damage, foundational cracks, and more. The inspection report will provide you with a checklist of all the things you should do to make sure the home is in tip-top shape! If there are significant issues, this is also a prime opportunity to consider your options about the home. Your Real Estate Agent will assist you in the negotiation process post-Inspection.
5. Not Using a Broker
A Mortgage Broker will shop around to get you the best rate, program, etc. We compare prices for cars, TVs, groceries, etc. so why not price compare your mortgage too? A Dominion Lending Centres Mortgage Broker works with you and has access to multiple lenders to find the best options for your lifestyle.
Similarily, you could house hunt alone. However, a Keller Williams Complete Realty Sales Representative will work in your best interest to source your dream home. We have access to multiple listing services, a database of active and potential sellers, experience with new builds and For Sale By Owners, as well as an exclusive network of homes that have not even hit the active market yet.
Trust Sozio Real Estate & Mortgage Consultants to make the home buying process as seamless as possible, from start to finish. Selling dreams and creating lifestyles since 2001.