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November 20, 2019 | by QualicoCommunities
Buying a home can be a complicated process, especially if it’s your first time on the market. Many first-time buyers don’t know how to start their house hunt, where to look, or who to go to for help during the home buying process. As a result of this, they end up making costly mistakes that can make buying a home a nightmare. Luckily, the missteps often made on the road to homeownership can easily be avoided. We’ve compiled a list of the most common mistakes made by first-time homebuyers and how you can escape them.
When it’s time to buy your first home, you may be tempted to start the process by looking at houses right away. This is a common mistake first-time homebuyers make. Looking at homes prematurely often leads to disappointments – especially if you have no clue how much home you can afford. This is where mortgage pre-approvals come in handy. To avoid getting carried away while house hunting and looking at homes that are too expensive, we suggest you get your mortgage pre-approved first. This way, you’ll know the maximum amount you can spend on a home and the monthly mortgage payment associated with your maximum purchase price. This information will guide your home search and make sure you’re looking at desirable spaces that won’t break the bank.
It’s common knowledge that in order to get a mortgage and purchase a home, you have to have good credit. Lenders want to know that they can trust you with a loan, so credit checks are common practice at the preapproval stage. However, most first-time buyers don’t know that lenders can pull your credit report again before you close on your home – just to make sure things are still in order. This means that any new loans, credit cards and unpaid balances could jeopardize your closing and final sale. To avoid a situation like this, try to maintain good money habits. Spend thirty percent or less of your monthly credit card limit and pay your bills on-time and in full every month.
Often times, buyers have their hearts set on a specific neighbourhood or a specific home type when house hunting. This limited approach when looking for your dream home can make you miss out on great locations and great finds. Plus, limiting yourself to a single neighbourhood or home style may create disappointing results. You may find out your dream neighbourhood doesn’t meet your needs, or that you can’t afford your ideal home. From our experience, it’s best to approach house hunting in a more pragmatic way. Create a list of needs from both your neighbourhood and your home. For example, most first-time buyers want to live in a home with room to grow and a community that’s close to work. Once your list is made, you can then pick the perfect location and space that meets your needs.
Another common mistake first-time homebuyers make is being unaware of government incentives. As a result of this, buyers may delay their home search assuming they don’t have financial help or options. However, programs like the Government of Canada’s First-Time Home Buyer Incentive (FTHBI) are designed to reduce the financial burden of homeownership for first-time buyers – making homeownership more accessible. Before looking for a new home, make sure you learn about the FTHBI and other useful incentives that could help kick-start your homeownership journey.
Buying a home is a huge milestone and probably the biggest investment you’ll make in your life. So, it’s best not to reach a final decision based on emotions alone. Getting too emotionally attached to a house or neighbourhood increases the likelihood of breaking the bank. To avoid this, always keep your budget in mind, and try not to get too invested in a home that isn’t yours yet.
Purchasing your first home doesn’t have to be a stressful process riddled with mistakes. By being informed about these common missteps first-time homebuyers make, you’ll be able to have a stress-free journey to homeownership.
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