Top 3 First Time Home Buyer Mistakes
Everyone who has bought a home has been through it, the scary, nervous time of learning a new language, relying on strangers you don’t know and making massive decisions you are sure will ruin your life. All this while getting opinions from everyone you have every known whether you want them or not!
Despite all this there is an upside…you also get to have you own home!
In the hope of helping those who have not gone through this “rite of passage” to home ownership, I want to share with you some of the most common mistakes people make and how to avoid those yourself.
#1. Most people don’t work out what their budget is.
You are on reading this here on Canadian Budget Binder, so I am sure you have done one by now, but you would be shocked how many people are not even aware of what they can afford, let alone what their plan is, other than wanting a home. A detailed budget and plan of potential costs is a must to start this journey. Staying with it is a key to living happily ever after!
#2. Little or no understanding of the home buying process.
You don’t have to become an expert in home buying, but having a basic understanding of the overall process and the steps that are involved is a smart move to avoid last second decisions which can cost you money. There is lots of information online (stay on Canadian websites, US ones will just confuse you as their process is completely different), here are a few sites to look at:
- CMHC: Government owned corporation that insures those buyers with less than 20% down payment…good information here, though written by bureaucrats (a little dry!).
- Genworth: A Private Insurer, similar type of site.
- Househappy: Shameless plug for my new site, we have shot a number of videos and written ebooks to help people with the process.
- Various lender sites etc.
#3. Not putting a team of experts together first.
This is probably one of the biggest decisions of your life, make sure the people you are going to listen to for input on that decision are people who have the knowledge, experience and are worthy of your trust. The majority of people drive by a property and call the Realtor who has the listing, without ever researching them, then rely on that person to refer them to a mortgage specialist and a lawyer or notary.
While this may work out ok, I highly recommend you meet with a mortgage specialist first…find someone who your friends or family recommend and who is going to look after you for the long-term, not just for this mortgage. I am an Independent Mortgage Broker and obviously am biased, but feel strongly you are more likely to get objective advice from a Mortgage Broker than you are from a Bank Rep or Mortgage Specialist simply because Brokers have more options.
Get your budget out and review it with your Mortgage person, and make sure you are comfortable with the amount you are pre-approved for…just because the lender offers you more, doesn’t mean you should take it. In fact, make sure whatever Realtor you end up with, never shows you homes above your budget, this is a big part of why people end up house poor…they see a home they really shouldn’t and stretch to buy it.
Once you have your numbers set and your mortgage plan in place, the next step is to get a Realtor on working for you. This is very important, as you want to have someone negotiating on your behalf…so often people will end up paying more because they rely on the realtor who is listing the property they want. Get someone on your side…once again talk to your family, friends or mortgage person to find a competent, experienced Realtor who listens to your needs.
Lastly, you will need a Lawyer or Notary who is working on your behalf as well and who can help you with those tough decisions. Always have your contract reviewed by the Lawyer so they can point out problems with dates, subjects etc.
These are three areas that will make a great start for a successful first time home buying journey. There are a number of other areas that are also important, we will get to those in our next post.
Thanks for reading, I am offering a $50 iTunes card to one lucky reader for participating in Canadian Budget Binders Facebook Contest related to this post. Head on over to Facebook for the details. Contest Closes 11pm EST Wed April 25,2012.
Congratulations to ….. drum roll….. Shawna Klassen! She is our $50 ITunes Winner!!!!
Michael Anthony Lloyd is a Mortgage Expert with DLC Canadian Mortgage Experts and has been helping Canadians with their mortgages as a Mortgage Broker since 1999. Helping Canadians reach their “Mortgage Freedom Day” sooner is his goal. He writes a Blog called The Daily Dig as well as leading the DLC CME team of 75 brokers.
- Why The Word Budget Hurts Our Ears
- Do You Know Your Credit Score Canada? Why Not, It’s Free
- How To Maximize Your Mortgage
All Photos Courtesy of: Michael Anthony Lloyd