So you are ready to buy your first home.
You’ve saved the down payment. Your credit is excellent. Now all you need to do is find one, right?
Sorry, but it’s not that easy.
Nobody’s perfect the first time they do something. And buying a home is no different. But making a mistake with a large investment can hurt your credit and cause longer term issues.
Be sure you don’t make these first-time homebuyer mistakes.
Avoid buying during a seller’s market
What’s a seller’s market? It’s when there are fewer houses on the market and sellers can name their price. Homebuyers have less clout when it comes to renegotiating the selling price.
Contact me and I will help you determine if it is a seller’s market or buyers market. If you can wait, it’s better to buy a home during a buyers’ market.
Only looking at the sale price of the house
There’s a lot more to buying a home than the mortgage. Make sure you also budget for:
- your closing costs
- propery taxes
- homeowners’ insurance
- utility bills
- costs of things you want to fix before moving in
- purchasing furniture, a lawnmower, snowblower, blinds, etc.
Making too much of a financial commitment
If you go get pre-approved for a mortgage, and your credit is excellent. You might be surprised when you see how much you were pre-approved for. But mortgage lenders aren’t your accountant, and they don’t know your long-term plan.
Your preapproval doesn’t take into account how much you want to save for retirement. It also doesn’t take into account the money you need to put away for an emergency fund. It also doesn’t know what lifestyle you want to live.
When you’re choosing your first home. Be sure to take a close look at your entire budget. Figure out what type of mortgage payment you can afford each month. Once you figure that out, you can use a mortgage payment calculator to see how much you should spend on a house.
Don’t sign with the first lender you got a quote from
Speaking of pre-approvals, you don’t have to take the first offer you see from a mortgage lender. Be sure to shop around for your mortgage so you can be sure you’re getting the best rate.
That rate is going to affect your payment for years to come. Even a 1% difference can mean a lot more money out of your pocket over time.
Not researching the neighbourhood
Choosing the wrong neighbourhood isn’t such a big deal when you’re renting. After your lease is up, you can always move. But you can’t change your location that easily when you’re a homeowner.
Not to mention, if the neighbourhood continues to go downhill. Your home value is going to suffer when it’s time to sell. As your real estate agent, I will help with your research, and help find the right neighbourhood.
Look beyond the little things
There are some parts of your house that you should not compromise on. The most expensive room to renovate in the home is the kitchen. If you want a big kitchen, then don’t buy a home with a small kitchen. But if you hate the wall colour and those bushes by the window are awful, are those are easy changes. Don’t make those little a deal-breaker. Cosmetics are fixable over time.
Check your budget. Make sure you can either afford to fix those things before you move in. Or that you’re willing to live with them for a while.
Over (or under) estimating ability to DIY changes
It’s not going to take a lot of money or time to paint over that yellow wall you hate. But it’s a different story if you want to knock down a couple of walls and open up the floor plan.
Foregoing a home inspection
Unless you are building your first home you need a home inspection. Ask why the owners are selling. They may have bought the house without a home inspection and are now trying to pass the issues on to you.
No matter how nice the sellers are, you need to get the home inspected. Checking now will help make sure you don’t find out your new home has termite damage or structural issues.
Only thinking short-term
If you’re planning on raising a family in your new house, you should pay attention to a few things like:
- proximity to schools and parks
- city transit location (you probably don’t want the bus to stop directly in front of your home)
- noise from busy roads, airports
- odours from nearby commercial or industrial businesses
If you’re only planning on staying there a year or two. Would it make more sense to rent until you can stay somewhere long term?