6 Common mistakes by First time home buyers
As I mentioned in some of my previous articles, buying a home is one of the biggest investment that one makes in his or her lifetime. If you are the first time home buyer, that even makes it one of the best and most exciting moments of in life. Stepping into your first home is a dream come true for everyone, so you need to make sure your home buying experience is seamless and trouble-free.
1. Evaluate your need
during the home showings with your real estate agent, you will see a different variety of homes; some really awesome homes and some not so good. The very first step is to evaluate what exactly is your requirement when buying a home. You need to clearly evaluate what your needs are.
- Do I need a condominium apartment or a semi/detached/townhouse home
- What would be my preferred location?
- Is it close to my working place?
- Would I need 2,3 or 4 bedrooms house? Think about the needs and not luxury being a first time home buyer!
- number of garages I may need
- how far is the home to the nearest school/college (if you have kids)
- is there a popular shopping place close to my home
the above are some of the points that need to evaluate before planning to buy a home. Never make a hasty or an emotional decision. Home buying needs a lot of patience and serious evaluation.
2. My affordability
The first step of the evaluation of need is closely related to the of affordability factor. You should be very clear on your affordability range. Never overstep your budget and very clearly draw a line on your budget. You are buying a house for your family that gives you peace of mind and you do not want to lose your peace of mind because you overshot your affordability limit. A lot of first to new buyers make a big mistake of buying overly expensive homes either to impress their friends/family or try to compete with others. This is a big mistake. Even a small home is fine and you can always upgrade later but do not take chances. Home buying is a big investment so you need to make sure you can afford it. If you cannot afford a home, don’t buy it.
3. Get yourself pre-approved
Now that you have set a budget for yourself, get your mortgage pre-approval from your bank or a private lender based on the rate of interest. A lot of new buyers make this common mistake of signing the offer and then struggling to secure a mortgage at the last mortgage. You might lose your deposit if you are not able to arrange the mortgage. Preapproval is a safe way as you as a buyer knows what is your home buying max limit. You need to make sure the mortgage that you will be paying carries the lowest possible rate of interest and therefore shop around to get yourself preapproved to get the lowest interest rate. You might be given an option of variable and fixed interest rate. Always acquaint yourself with the latest financial updates in the market and make your decision accordingly. If your bank is not approving you for the projected amount, you can always go to the private lenders and secure a preapproval but that might come with a higher rate of interest. A note of Caution is that a pre-approval does not guarantee a mortgage. The banks evaluate various financial parameters including your credit score, your balance, income, earning to debt ration etc. Therefore be extra cautious when making a home deal.
4. Make a checklist
now that you are preapproved, ask your real estate agent to start making appointments for the homes. Make a small checklist of the most desirable requirements. The home that fulfil the maximum number of checklist criteria should be an ideal option for you. Never hesitate to ask any doubt or question you may have. If you have finalized a home, ask your agent to book a couple of more appointments. This will make sure you did not miss anything while on your first appointment. Inspect the home carefully before making a final decision. Check the historical pricing of the home which can easily be found from your real estate agent.
5. Stick with the offer conditions
Now that you have liked the home and ready to make an offer make sure you are putting the necessary conditions which will safeguard you from future troubles. One of the most important conditions is the home inspection clause which should never be omitted. There have been several instances of new buyers missing out on a home inspection clause and then finding major structural issues with their homes. A home inspection is arranged by the buyer and the home inspector inspects the home for all types of issues including leaks, plumbing issues, electrical problems and much more. It is the duty of the seller to fix the problem at their own expense if there is any major issue reported by the home inspector. Here are some of the important clauses that you need to add in the offer to safeguard your interest.
- Clause for mortgage approval
- home inspection clause
- title search clause
Never remove conditions as they are added for your protection. Once each and every condition of your’s is fulfilled, you move on to the next step.
6 Don’t underestimate your closing cost
Now that you for has been signed back, you are ready to move to your new home. Before you make a final move, you need to factor in the closing costs. The closing cost can range from $ 1,500 to as high 5,000 and you need to make sure you budgeted this amount as the closing cost. The closing cost includes your lawyer’s fee, property taxes, utility bills etc. some of these are upfront payments, so make sure you have saved enough to cover the cost of closing. You also need to factor in the moving cost from your current home to the new home. A lot of new buyers miss the closing cost payments and end up borrowing from their family and friends.
I hope the above-mentioned tips are for all our readers especially the new home buyers. I want to make sure your first home buying experience is seamless and truly exciting. If you have any question real estate or if you’re looking to buy a new home, please feel free to contact me via email or my phone number. I would be happy to assist with any kind of real estate needs in the greater Toronto area.
Read our other important blog posts:
First time home buyers- be wary of Jan 1, 2018
Why Toronto (GTA) is the best place to buy a home
6 Inspections That Should Be Included in Your Home-Buying Checklist