Are you a first time home-buyer? Keep reading this to avoid the most common mistakes buyers might make when purchasing a new home!
Whenever we talk about buying real estate, we’re talking about hundreds of thousands to millions of dollars. Because the price is high, the costs associated with the purchase is naturally high as well. However, there are mistakes that you can avoid so that you’re minimizing your risks and costs. Here are the 4 most common mistakes buyers might make when they’re purchasing a new home.
1. Not getting pre-approved for your mortgage.
This may be the most expensive item you’ll buy in your entire lifetime. You need to really sit down with your mortgage professional to see how much money you can borrow and how much your monthly payment is going to be. Also, applying for a mortgage can be a complicated process with many required documents to provide. You may think that getting a mortgage is easy because of your financial situation, but there are lots of things banks will consider that you may not know about. So connect with your mortgage professional to get that all sorted first, then you’ll know exactly how much you can afford.
2. No Home Inspection.
Unlike the guarantee a buyer receives with most purchases, there’s no money-back guarantee or return policy if you’re not satisfied with your recently purchased home. Once you buy a home, you’re on your own to maintain it, repair it, anticipate problems and pay the bills. This is why it’s best to know as much as you can about potential problems before you buy, especially for older properties. One of the best ways to see if a home is in good condition, livable and safe is to hire a professional home inspector.
A properly trained home inspector will review your house as a system, looking at how one component of the house might affect how another component works or how long it will last. Home inspectors will go through the house and perform a complete visual inspection to assess its condition and all of its systems. They will determine the components that are not performing properly as well as items that are beyond their useful life or are unsafe. They will also identify areas where repairs may be needed or where there may have been problems in the past. Inspections are intended to help homebuyers better understand the condition of the house, as observed at the time of the inspection.
3. Not budgeting for the increased costs.
Home ownership comes with additional costs that you don’t have when you’re renting. In addition to mortgage payments, you will now have to pay property taxes, perhaps higher utility bills, home insurance, strata fees, and extra costs for maintenance and repairs. Ensure you’re also budgeting these on top of your mortgage payment
4. Not knowing the closing costs.
A lot of buyers forget about the closing costs. Unlike buying a TV where closing costs would be things like GST, PST, and perhaps an extended warranty, closing costs for buying a home are much more substantial. When you’re looking at listing prices on MLS, be prepared to pay much more than that. The costs aren’t to the Seller but to the government, your solicitor, and other real estate professionals. The largest closing cost is the property transfer tax. This amount cannot be borrowed so you’ll need to cash available on hand. Other costs include lawyer fees, titles fees, and appraisal fee. Don’t get caught short, especially with the property transfer tax. If you cannot pay it at the time of completion, you cannot complete the transaction.
And there you go! 4 most common mistakes buyers might make when they’re purchasing a new home. Contact me and we can discuss these common mistakes and work out the numbers together.
If you want to learn more about the first time home-buying process, make sure to check out our YouTube channel for more tips and tricks!
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