Are you buying your first home? Or, do you already have a few properties in your portfolio and are looking to expand? Whichever end of the spectrum you’re on, here are five mistakes to avoid when purchasing a home. Some of them you may have already know or have heard of from home-buying friends. Regardless, keep this as a handy list for things to avoid when shopping for a home.
1. Shopping Outside Your Budget
It’s always an excellent idea to get pre-approved prior to starting your house hunting. This can give you a clear idea of exactly what your finances are and what you can comfortably afford. If you’ve been pre-approved, great! Your Mortgage Broker will give you the maximum amount that you can spend on a house but that does not mean that you should spend that full amount. There are additional costs that you need to consider (Property Transfer Tax, Strata Fees, Legal Fees, Moving Costs) and hence leave some room in your budget. Stretching yourself too thin can lead to you being more stressed than you would otherwise be, which is something you want to avoid. Instead, buying a home within your home-buying limit will allow you to be ready for any potential curve balls and to keep your savings on track.
2. Forgetting to Budget for Closing Costs
Most homebuyers know about the down payment but fail to realize that there are several costs associated with closing on a home. These side costs can be substantial and should not be overlooked. They include:
- Legal and notary Fees
- Property Transfer Tax (though, as a First Time Home Buyer, you might be exempt from this cost).
- Home Inspection fees
- There can also be other costs included depending on the type of mortgage and lender you work with (ex. Insurance premiums, broker/lender fees). Check with your broker and get an estimate of what the cost will be once you have your pre-approval completed.
3. Buying a Home on Looks Alone
It’s common to grow attached to a home in the first few seconds of walking into one. Updated kitchen + bathrooms, beautifully redone flooring, new appliances…what’s not to like? Before submitting an offer on the home, be sure to check for important condition questions such as any of the following:
- When was the roof last done?
- How old is the furnace?
- How old is the water heater?
- How old is the house itself? And what upgrades have been done to electrical, plumbing, etc.
- When were the windows last updated?
All these things are necessary pieces to a home and are quite expensive to finance, especially as a first- time buyer. Look for a home that has solid, good bones. Cosmetic upgrades can be made later and are far less of a headache than these bigger upgrades.
4. Skipping the Home Inspection
In a red-hot housing market, a new trend is for homebuyers to skip the home inspection. This is one thing we recommend you do not skip! A home inspection can turn up so many unforeseen problems such as water damage, foundational cracks and other potential problems that would be expensive to have to repair down the road. Additionally, getting the home inspected before purchasing can save you a few thousands in cash or more if any issues are discovered. The inspection report will provide you a handy checklist of all the things you should do to make sure your home is in great shape.
5. Not Using a Broker
We compare prices for everything: Cars, TV’s, Clothing… even groceries. So, it makes sense to shop around for your mortgage too! If you are relying solely on your bank to provide you with the best rate you may be missing out on great opportunities that a Leap Financial mortgage broker can offer you. Mortgage brokers are trained to find you the best rates in your area and the best properties for your lifestyle.