10 Mistakes the First-Time Homebuyer Should Never Make
17 Feb 12
10 Mistakes the First-Time Homebuyer Should Never Make
Considering buying your first home? It’s a very exciting time with lots to consider, it can be also be a bit stressful. Ultimately you want to end up with a home you love at a price that makes sense. It sounds simple, but there are mistakes many first-time buyers make that prevent them from achieving their goal. Here are a few tips to help start you off right and keep you on track as you search for you perfect place.
1. Know How Much You Can Afford
Consider you overall budget and if you don’t have one yet make a list of your monthly expenses. Include everything except your rent – things such as groceries, car loan, student loan and health club dues. Don’t forget major expenses such as insurance premiums or annual vacations that come only once a year. Subtract this total form your take-home pay and you have the amount you can afford to spend on your new home each month.
2. Meet With a Mortgage Lender
Though you may have a good idea for what you can afford to carry as a mortgage, you should check with a mortgage provider to establish exactly what you qualify for. There are a number of factors that will affect your ability to get the mortgage you want. Poor credit rating or an income that changes from year to year may affect not only the amount but the interest rate the banks will charge. There is no point searching for a home only to discover the bank won’t lend you what you need to get it.
3. Not Considering All Those Additional Expenses
There are many additional expenses monthly once you become a home owner. When considering your budget and what you can afford, make sure to factor these expenses in.
The property taxes, monthly heat and hydro, home insurance as well as possible larger expensive items that might need replacement (like a new roof or furnace repair).
If you purchase a condo there are monthly maintained fees to consider. They should be stated on the listing, but most condo owners are also responsible for property taxes and hydro. Some condo units also have in unit heating/ cooling systems that require that the owner pay for those cost as well. Make sure you understand what is included in your maintained fees and what is not. Your agent can help you make sense of it all.
4. Expecting too Much
Make a wish list of everything you want in your new home – but be prepared to be flexible. That perfect house may not be out there at the price you can afford. You may be looking for a lot longer than you plan and in most markets, the homes in your price range will go up in price from one season to the next – taking then into another price range altogether. Prioritize around the features you want to have, like a garden or that parking space, but realize that some features may not be important enough to give up your the dream of home ownership.
5. Lacking Imagination
Many buyers, not just first-time buyers, get turned off by a home’s décor or outdated bathrooms. If the other features are there – live with the less than perfect if it means that you can get your place at a price you can afford. Remember that with a little imagination and work, much can be done to a home. Renovating your home over time will help you increase the value of your home. You will be doing the renovations to suit you and at a pace your budget can afford and in the long run it will cost you a lot less too.
6. Falling Head Over Heals
Don’t let home staging or clever marketing play on your emotions and entice you into paying more than a home is worth. This happens very often in the hot spring market with bidding wars common in many urban markets. Discuss your budget limit for your new home with your agent and stick to it. It’s better to find a house that you can add value to than to pay $50,000 more for a home than it should sell for simply because the owner has spent $1,800 on home staging.
7. Compromising On The Important Things
Don’t buy a home with a tiny kitchen if you and your partner are gourmet cooks. You will have to be flexible on some of the wish list items for your home, but don’t compromise on things that you simply can’t do without. You’ll be making plenty of sacrifices to afford your home, it’s important to feel happy.
8. Not Hiring an Agent or Using the Seller’s Agent
The home buying is a complex process and perhaps the most expensive investment you will make. Be sure the person guiding you through the process has your best interests at heart – an agent that has a buyer’s agency agreement in place with you has a professional and ethical duty to act for you in every stage of the transaction. It won’t cost you more to use your own agent, but it may cost you a lot more if you don’t.
9. Not Inspecting The Property
There are very few circumstances where foregoing a home inspection are a good idea. If you are an architect, civil engineer or builder perhaps you can recognize all of the potential issues with a house. Even if an inspection has been ordered on the home by the seller, don’t trust that report. There is a chance that the inspector has prepared the report to favour the seller, understating the home’s problems. Your own inspector will give you a full report on the home’s condition and outline the costs and time table for repairs needed. This information will help you make an informed decision based on your budget.
10. Not Considering Your Future
Are you buying a home next to a vacant lot? You should look into the future plans for the neighbourhood. Better to be informed than unpleasantly surprised.
Other things to consider might be future street or highway changes, zoning changes in the area, and the trend in housing prices in the neighbourhood. Your agent will be able to help you do the necessary research to ensure your investment is well protected and your enjoyment of your property is secure.