Are you thinking about buying your first home? Here are 8 common first-time buyer mistakes to avoid.
Mistake #1: Not Getting Pre-Qualified
Pre-qualifications are important because they give you an idea as to how much home you can afford. During this process, a lender will examine your income, debt, credit and assets and give you a rough estimate as to how much they’d be willing to lend you. From here, you’ll know what you need for a down payment and what you can expect to pay for a monthly mortgage loan.
Mistake #2: Not Checking Into First-Time Buyer Programs
The Government of Canada offers several incentives for first-time homebuyers in the form of down payment help, tax credits and more. These include:
Mistake #3: Not Getting Pre-Approved
After a pre-qualification (and saving for your down payment) a mortgage pre-approval should be your next step. A pre-approval is a commitment from a lender (usually for 30-90 days) to provide you a mortgage loan at a locked-in rate. This is essential for first-time buyers if they hope to be taken seriously by home sellers.
Mistake #4: Buying More Home Than You Can Afford
According to the Canada Mortgage and Housing Corporation, your monthly housing-related costs (mortgage payment, heating costs, utilities, condo fees etc.) should not exceed 32% of your total monthly income. Using your entire mortgage loan amount or buying at the high end of what you can afford puts you at risk of becoming house poor.
Mistake #5: Making Major Purchases Before the Sale is Final
Even if you’ve already secured a loan, major purchases (i.e. a new car, new furniture etc.) can adversely affect your credit – causing the lender to rethink your loan. Avoid taking out any new loans, activating new credit cards or applying for any other form of credit before the sale is final.
Mistake #6: Not Planning Ahead
The home you’re considering may suit your current needs, but what about in five years? Do you see your current family dynamic changing? For instance, if you’re planning on having children in the near future, you’ll want to ensure your home (and neighbourhood) will suit your needs.
Mistake #7: Being Too Picky (or not picky enough)
When it comes to buying your first home, it’s natural you’ll want everything to be perfect. However, home buying often involves some compromise. Don’t overlook a potentially great home simply because it doesn’t have quartz countertops or you don’t like the colour of the carpet. These things can be replaced. At the same time, don’t become so carried away with the excitement of home buying that you wind up with buyer’s remorse.
Mistake #8: Not Working With a REALTOR®
A home is one of the largest investments you’ll make in your life. For this reason, we strongly recommend working with a qualified Edmonton REALTOR®. A wealth of knowledge, advice and resources, your REALTOR® won’t just help you find your dream home, they’ll be there to support you through the entire home buying process.
Are you thinking about buying your first home but unsure of where to start? We can help. Click the button below to get your FREE copy of our Step By Step Guide For Buying Your First Home or, get in touch with us!Terry Paranych on