Over the years, I’ve seen first-time homebuyers make some foolish mistakes. Here are eight mistakes that you should avoid:
1. Spending over your budget. It’s always a good idea to get pre-approved before you start looking at homes. That way, you know exactly what to expect from your monthly mortgage payments.
2. Not borrowing against your RRSPs (Registered Retirement Savings Plans). As a first-time homebuyer, you can borrow up to $25,000 interest-free for your down payment. If you are buying with a partner who is also a first-time buyer, you can get up to $50,000.
3. Not getting a home inspection. An inspector will check the roof, electrical, foundation, appliances—anything that could lead to expenses in the future. The last thing you need is to move in and be faced with a large repair bill.
4. Not accounting for closing costs. Closing costs can vary depending on the type of property and financing you have. Closing costs can range from 2% to 18% of the purchase price, so make sure you have this accounted for before you begin your home search.
5. Secure your down payment funds for your mortgage. Most mortgage brokers and banks require savings history on the funds. The funds usually need to sit in your account for at least 90 days before lenders prepare to issue you a mortgage, so please plan ahead.
6. Not getting a mortgage approved by a live person. Most mortgage pre-approvals are automated online, which means your employment, down payment, and credit history are not being verified. Relying on an online pre-approval can ruin your transaction.
7. Selecting the wrong neighborhood. Make sure to check the school district and distance to amenities. It’s also a good idea to visit the neighborhood at different times of day to assess noise levels.
8. Not using a Realtor as a buying representative. Having a Realtor on your side is always a smart decision. A buyer’s agent understands the market, as well as how to negotiate the best price and terms for you. Would you hire a lawyer to represent you in court, or would you represent yourself?
If you have any other questions about buying a home or about real estate in general, just give me a call or send me an email. I would be happy to help you!