You have finally made the big decision to buy your first home in Canada. Congratulations! I am sure you can’t wait to start looking for that perfect place to settle in. Home buying is, undoubtedly, one of the most exciting experiences in anyone’s life.
However, purchasing your first home comes with its fair share of stress along with it. From deciding the type of house suitable for your family, getting pre-approved for a mortgage loan, to negotiating the offer, and handling all the legalities – it is bound to be a time-consuming and frustrating journey.
Throughout my experience as a real estate agent, I have seen eager first-time buyers make many mistakes in their excitement and hurry of finally getting their own home. I have compiled a list of the most common mistakes made by first-time home buyers and how you can avoid them:
Not Hiring a Real Estate Agent (ME)
Among the most crucial mistakes to avoid when buying your first home is to not hire an experienced real estate agent to guide you through this process. An expert realtor has a thorough understanding of the market, and is aware of suitable homes that can meet your requirements and budget.
The agent can save you time by showing you homes they know you will like. Moreover, they will also help you through difficult contractual agreements, understanding the financing jargon, and not to mention, negotiating on your behalf.
Falling in Love with a House too quickly
Often people fall for a house that closely resembles their dream house. They make a quick buying decision without looking at other houses, which might be more appropriate for them because they don’t want someone else to make the purchase before them.
The fact is that what appears like your dream house might not even be suitable for you. This is something many first-time home buyers realize after they finalize the deal. It is essential to consider both the pros and cons of every house you view. Every house will have certain issues and problems, along with the many benefits. You need to closely examine all aspects before you make the final decision so that you don’t have any regrets in the future.
Not Considering the Location
A breathtaking interior will do you no good if it is miles away from your work, in an unsafe neighbourhood, or in the middle of nowhere. I can’t stress enough the importance of location. This factor also plays a major role in determining the future appreciation and resale value of the house.
You must not neglect exploring the neighbourhood, talking to the neighbours, finding out about the school district, the commercial area, as well as the distance from your work. All these factors play a major role in a successful home buying process.
Neglecting Professional Home Inspection
This certainly will be appealing to the seller of the house, but you will end up with a house loaded with faults in your hands. This means you might have to spend more on fixing the problems and end up in a tough financial situation.
I always recommend buyers to conduct a professional home inspection to identify any existing or potential issues in the house. This gives you a better idea and helps you determine whether or not you want to close the deal.
Opting For an Unaffordable Home
Many first-time home buyers are thrilled to get approved for a mortgage loan suitable for a luxurious home without considering that it might not be affordable. Getting a mortgage certainly doesn’t mean you would be able to afford an expensive house.
You must examine your savings and financial situation, create a budget and then determine what you can afford to pay every month. Consider the costs associated with utilities, property taxes, insurance, and other fees to avoid ending up in a home you can’t afford in the long term.
Not Waiting for a Mortgage Pre-Approval
When you make the decision to buy your first home, it is understandable that you would want to immediately start house hunting. This will not only waste your time, but will also make the decision hard. Getting pre-approved for a mortgage immediately narrows down the choices to the ones you can afford, and makes the home-buying process quicker and smoother. Most importantly, sellers always give priority to the buyers who are pre-approved for mortgage.
Failing to Focus on the Bones of the House
It is difficult to say no to wooden floors, marble countertops, and a beautiful garden, but you must remember that the structure and bones of the house is the key. You must consider the condition of the plumbing system, construction, HVAC unit, as well as the roof, along with other factors. Merely focusing on the aesthetics of the house is not enough to make a sound buying decision.
Not Hiring a Lawyer
Often, first-time home buyers avoid consulting a lawyer for various reasons, including saving money, having a bad encounter with a lawyer previously, or too much self-confidence. This decision may cost you a major chunk of your money.
Buying a house isn’t merely about selecting one house and paying for it. The process involves plenty of legalities, which an individual without a legal background and experience might not be able to handle on their own.
Therefore, to protect your investment and ensure you make the right decision, it is always wise to get all the paperwork checked with your lawyer before you sign anything.
Opting for a Fixer Upper or Handyman Special
Even if you have been pre-approved for a mortgage, you still might not get approved for financing if you are hoping to buy a dilapidated property to fix it up. While minor updates and renovation might not be a problem, but your mortgage broker might not agree with you opting for a major fixer upper.
Be sure to discuss any such projects you might have in mind with the mortgage broker before you make the purchase offer so you can avoid unnecessary stress.
Forgetting about Closing Costs
Another mistake many home buyers make is not considering the closing cost when creating their budget. It is pretty easy to miss the closing costs when you have never purchased a house before.
Often, closing costs end up being three to four percent of the purchase price of the house! This will surely put a major dent in your budget. Therefore, save yourself from this stress and make sure to include closing costs in your budget. This may include fees for home inspection, lawyer, and land transfer taxes.
It is indeed rather tempting to make the full down payment by scraping as much money as you possibly can. This typically means using all your savings. While completely using your savings to pay the closing costs and down payment may seem rational to you, it is certainly not a smart decision.
Doing this means you will have absolutely nothing left for unexpected renovations, emergency funds, price hike in bills like insurance and property tax. You will only end up putting yourself and your family in a risky situation with nothing to fall back on.
Make sure to talk it through with your mortgage broker and discuss all your options. Make sure you have enough savings for emergencies.
Also, consult an expert to make your home buying experience a pleasant one. Purchasing your first ever home in Canada is indeed a significant investment that will set you up for years to come. Therefore, be wary of these mistakes to ensure you can secure your investment.
You want to talk further… please feel free to contact me!