(And How to Avoid Them)
So you’re ready to buy your first home! Shopping for your first home is an experience that will have you feeling different emotions along the journey. Excitement as you enter through the doors of the first home you’ve chosen to view. Exhausted as you book yet another appointment with your Realtor. And nervous once you decide you’ve found ‘the one.’
But before you take the leap and begin this life changing journey, read the the tips below so that you can avoid many of the mistakes first-time homebuyer make.
After you read these 7 tips, it won’t be long before you’ll be snapping a selfie beside the ‘sold’ sign in front of your new home!
- Thinking They Don’t Need a Real Estate Agent
Venturing into the process of looking for and buying a home requires professional help. Most people looking to get into awesome physical shape and get results fast would turn to a professional - a personal trainer. Similarly, if you want to ensure a great home buying experience that gets you the results you want, you will need a real estate agent. First-time home buyers should not try to negotiate or deal directly with the listing agent. Get a reputable agent on your side.
- Not Knowing What They Can Afford
It is very important to know and consider your budget before deciding what you can afford. The final purchase price isn’t the only cost to consider when it comes to home ownership. You have to factor costs such as property taxes, heating, future repairs and renovations and unforeseen costs such as trees needing to be trimmed.
So make a budget and list all of your monthly expenses (excluding your rent). Don’t forget to include yearly payments and even annual vacations you take. Now subtract this total from the amount you take home after deductions, and you’ll have an approximate amount that you can spend on your new home each month. Make sure to leave some breathing room in your budget for unplanned expenses.
- Skipping the Mortgage Pre-approval Process
Don’t assume what you can afford and start looking for homes within your estimated range.
Take the time to speak to a lender first and get a pre-approval. This will also show the seller
and your real estate agent that you are a serious buyer.
- Not Preparing for Closing Costs
Many first-time home buyers don’t factor in other closing costs besides the down payment and
the purchase price of their new home. Closing costs include land transfer tax, possible
mortgage set-up costs, home insurance premiums, adjusted utility and property tax costs, legal
fees, and title insurance. Budget approximately 1.5 to 2.5 per cent of the purchase price to
cover your closing costs.
- Not Considering the Additional Expenses Associated with Homeownership
Unlike when you are a renter or maybe living with your parents, there are many extra costs associated with homeownership. As a homeowner, you will have to be prepared to cover additional expenses such as property tax, insurance and necessary home repairs. If you are interested in buying a condo, you’ll have to be prepared to pay maintenance costs monthly as well as any repairs required in the unit.
- Failing to Look Beyond the Cosmetic Stuff
As you tour a potential house, you cringe at the wallpaper. And the door knobs are just not your style. Maybe you prefer hardwood floors to carpet? Many first-time buyers find it hard to look beyond a potential home’s physical imperfections. But instead of focusing on the cosmetic stuff, look at the bigger, more important picture. Focus on the things that you can’t change and make sure you approve of them. For example, is the home in a good location? Are you satisfied with the size of the house? And if the imperfections continue to bother you after you’ve moved in, then save up some money to fix them. And doing upgrades yourself is often cheaper than paying the increased home value to the seller that has already done the work for you.
- Being Too Picky
It’s a great idea to have a new home wish list. But keep in mind, that your new home may not fulfill all of your requirements. You will likely have to compromise on something in order to ensure you buy a home that falls within your budget and affordability range. So be picky but don’t be too picky that you miss out on a great opportunity.