1. No Clear Budget
Jumping blindly into Homebuying without any knowledge of your budget could easily land you in a tricky situation. Most likely it will result in you falling in love with a home outside of your budget- worst case scenario you make an unachievable offer on it. The wake-up call will hurt and it may cost you the chance for a perfectly fine property that you overlooked.
2. Skipping Pre-Approval
Tying to the budget issue, the most accurate estimate of your budget will be from the bank. Meeting with a mortgager to get pre-approved will save you time, and stress before going homebuying. You will have the most accurate understanding of your finances, your budget, and when the right home comes along you can make an offer on it with full confidence and ease that your financing is firm.
3. Not Doing Your Research
There is a lot of research that goes into purchasing a home. You have to consider the location, if the area safe, if it’s in a certain catchment of a school, are there any future developments in the area to be aware of? What about the price? What is the listing price of the property like compared to similar properties in the area? Furthermore is there anything wrong with the house, or the documents, that impacts your living or the likelihood of investments.
Purchasing a home is fun! But you need to make the best educated choice and this all ties back to research.
4. Overlooking hidden costs
There are a lot of secret costs that go into homebuying! Fees for inspections, service charges, lawyer fees, property transfer tax, home insurance, moving expenses, and so much more. These costs could vary anywhere between couple hundred dollars, to a couple thousand dollars, depending on the situation: such as the cost of the home, your existing financing, the state of the appliances and many more.
5. Small Down Payment
A small down payment makes for a higher interest rate and anything less than 20% of the purchasing price for the home as a down payment will require mortgage insurance in Canada. It isn’t to say that you cannot purchase a home with less than 20% down payment, it is entirely possible, and sometimes encouraged. However unless you have a trusted realtor and mortgager to explain to you the difference and offer advice, it is generally suggested to save more.
6. Not Using a Realtor
A lot of times first time homebuyers jump right into home searching alone without considering a realtor to guide them. It’s good to wet your feet and get a feel of the market but small oversights could snowball into big mistakes that cost you more later on. By working with a realtor you have an expert in the field working at your disposal. A good realtor will explain the ongoing of the market and act entirely in your best interest, with the right realtor, there is no pressuring you into buying anything if you still have reservations.
These are 6 mistakes to keep and eye out for as a first time homebuyer. Purchasing your first home is an exciting and happy occasion, but for those who are unfamiliar with the real estate field, there is absolutely a learning curve to be aware of.
If you have any hesitations going in to homebuying, the easiest solution is to work with a realtor.
Contact us today and we’ll be happy to help steer you in the right direction.
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