In this blog post, we will be going over the 5 biggest mistakes first-time homebuyers make in Canada.
Prepare and Research
The single biggest first-time homebuyer mistake that we see a lot of people making is they are not mentally prepared to purchase a home. It is important to do your research and speak to a mortgage professional about how much you qualify for. We see a lot of people looking for houses, but they do not qualify for the amount that they want which leads to disappointment. We do not want our clients to be setting themselves up for emotional distress which is why it is a good idea to know how much you actually qualify for before you go looking for a home. You also want to make sure that you are mentally prepared for the responsibilities and the cost of homeownership. Once you are a homeowner there is a lot more you are responsible for including costs you might incur that you will want to know about upfront.
Getting Emotionally Attached Right Away
We see a lot of people fall in love with the idea of homeownership but not with the actual home itself. It is important to make sure you are considering all the alternatives and to give your realtor the opportunity to send you some options. Just because you started looking for your home does not mean you have to get the first home you like. Comparing your options will help you make a sound judgment in your final decision. If after comparing homes you decide the first option is the best for you then you know you can make this decision with confidence as you have looked at all the options presented to you.
During the process of looking for a home, your wants and need might change in what you are looking for in a home. You will not know what you truly want until you see different options and configurations on different properties. Make sure to give yourself time to look at the options available to you. You also want to make sure the price makes sense for you and that you do not overpay for a house. With the economy we currently have in Edmonton you should not be overpaying for a house and you should be paying market or below market. Just because you fall in love with a particular home does not mean you should overpay for it. Make sure to get comparable options from your realtor and make sure the price point makes sense to you.
Another thing to consider is your lifestyle and the location of the particular property you are looking at. You need to ask yourself if this property makes sense from a location perspective. Are you close to your friends, family, or work? You might be ok during the honeymoon phase of homeownership to drive 45 minutes to get to work but over time that can get old very quickly.
Not Getting a Property Inspection
Most likely if this is your first home it’s going to be your biggest purchase and since your already spending a couple hundred thousand on a home you should also be willing to spend the $500 it will cost to get a home inspection. A home inspection makes sure you have peace of mind and are not going to incur any costs right away as soon as you move in. You want to ensure the property you are buying is good and not a dud. Protect yourself and talk to a professional and get a home inspection.
Not Factoring in All the Costs of Buying
When you are renting a property most people only worry about the cost of rent and utilities. When you own a home there are a lot more things you need to consider that factor into your monthly budget. With homeownership, you need to factor in costs like property taxes, condo fees if it is a condo you are purchasing, or any sort of maintenance expenses that may occur.
If you are not putting 20% down, you will want to factor in the CMHC costs that come along with your mortgage payment. Typically, this cost is included in one payment, but it is a cost you want to be aware of. Other costs include legal expenses and as mentioned before the cost of getting a home inspection. In addition to these costs, you may do some minor renovations and you also must put aside some money to move whether it is hiring a moving company or renting a U-Haul. You will want to factor in all these costs in your budget.
Initial costs include:
- Legal Costs (legal fee, Disbursements, Title Insurance, any title, or land transfer taxes which may be applicable)
- Inspection Costs
- Moving Expenses
- Initial repairs/renovations
Ongoing costs include:
- Mortgage Payment (factoring in applicable CMHC premiums)
- Property taxes
- Condo fees (if applicable)
- Maintenance costs
- Property fire Insurance
Not Working with A Good Team
The biggest mistake is not choosing the right mortgage, real estate, and legal team to represent you in the transaction. You should ask yourself if you have done enough research on the people you are choosing to work with and if this is a full-time or just a side job for them. This will tie into the amount of experience they have and the number of transactions they have done. It is important to ensure the people you are working with are ethical and have a good reputation in the community.
Another thing to consider is if you are going to have a good time working with these people. Ask yourself the following questions:
- Are they going to jive with your personality?
- Will this be a seamless smooth process?
- Do they have your best interests in mind?
- Are they going to give you sound honest advice?
- Are they going to be able to help you during the homeownership journey?
The home buying process can be a lot of fun and it can be a great experience but if you are not dealing with the right team and the right people it can be a nightmare. Consider your team and who makes up that team when you’re looking to buy your home.
Contact The Mortgage Force Team
Contact Sunny Vig and The Mortgage Force Team in Edmonton today and we will answer any questions you may have. We work with a variety of lenders and all three insurers to get our clients into their homes.