Posted on
April 10, 2023
by
Nelle Derry
Buying your first home is one of life's biggest milestones. It is also a significant investment. Many people make mistakes when buying their first home, and these mistakes can end up being very costly. In this blog post I will discuss the 10 most common mistakes that people make when buying their first home.
1. Not getting Pre-Approved for a Mortgage.
Getting pre-approved for a mortgage should be your first step when buying a home. It is essential to know how much you can afford and what type of mortgage you can qualify for. Without pre-approval you can end up spending time looking at homes that are out of your price range. In Calgary's current competitive market, a pre-approval will also help to strengthen any offers you might write. It is important to be ready when you find the home that you like.
2. Not Hiring a Real Estate Agent.
Did you know that as a buyer, hiring a real estate agent does not cost you anything. That's right! Buyer's agent's commissions are (almost always) paid by the seller. A real estate agent can help provide you with valuable guidance. Working with an agent will help you when it comes to negotiating a price, advising you on home features, selecting neighbourhoods, understanding the documents associated with a purchase and more.
3. Not Factoring in Closing Costs.
Closing costs typically range from 2% to 5% of the purchase price. They may include things like lawyer fees, land title charges, a home inspection, property appraisals, HOA fees if they haven't been paid for the year, property taxes (depending on the time of year the home is purchased) and home insurance. Although they will likely be closer to 2%, its always safe to budget for more.
4. Not Getting a Home Inspection.
A typical home inspection will cost somewhere between $300-$900. While this might seem like an unecessary expense when you are already spending a lot on your new home, not getting a home inspection could end up costing you significantly more. A home inspection will help to reveal any major issues that could end up costing you later on. It is very common to include a home inspection as a condition in your purchase contract.
5. Overlooking Location or Neighbourhood.
When buying your first home, it's easy to get distracted by the features of the home itself, but it's equally if not more important to consider the location of the home. Consider factors such as proximity to work, schools, and amenities. Additionally, the neighbourhood can also impact the home's value. Time your commute to work or try spending some time in the neighbourhood during the day as well as during the evening to see if it is the right fit.
6. Not Understanding The Terms or Conditions of Your Mortgage.
Mortgages can be complicated, and it's important to fully understand the terms and conditions of your loan. If you don't intend to stay in your home for a long time, will you be able to get a new mortgage when it comes time to buy something different? Will you be able to handle a change in interest rates? These are important questions to ask your lender or mortgage broker.
7. Not Considering the Future.
When buying your first home it's important to think about your future plans. Will your family be expanding? Do you intend on getting a pet soon? Not all properties will allow for this. Will you be changing jobs? It's important to plan for the future so that you don't outgrow your space too quickly.
8. Underestimating the True Cost of Home Ownership.
In addition to the mortgage payment, homeownership comes with a variety of ongoing expenses. These include everything from property taxes and homeowner's insurance to general maintenance costs. Failing to budget for these expenses can lead to financial difficulties down the line.
9. Not asking enough questions.
Buying your first home is a complex process. It's important to ask questions and seek clarification when necessary. This is why it is so important to work with a qualified professional. Don't be afraid to ask your real estate agent. You should never feel as though you have been left in the dark. This is likely the biggest purchase you have ever made and I am always here to help you!
