Real Estate and Mortgage

Top 3 First Time Home Buyer Mistakes!

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Top 3 First Time Home Buyer Mistakes YOU MUST Avoid!



Anyone who has been a home buyer in the past can tell you what they would have done differently had they have know what they know today.

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!

Related: How to test budget a mortgage BEFORE you buy your first 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. As a home buyer you must take the initiative to explore all avenues and to trust no one but yourself and the professionals you hire. Even then keep a close eye on everything you sign up for.


1. Most people don’t work out what their budget is


You are reading this here on Canadian Budget Binder, so I am sure you have created your budget by now. If you haven’t you can download a free excel budget from Canadian Budget Binder to help get you started.

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 a home buyer journey.

Staying with your budget 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.
  • 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. The reason behind this is a big part of why people end up house poor. 

They see a home they really shouldn’t be looking at and then it’s hard to make a final decision or they base their decision on the bigger, more expensive home. This can cause grave financial trouble up the road if something were to happen.

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 home buyer needs.


Home Buyer Legals


Lastly, as a home buyer 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 buyer on a  journey towards home ownership. There are a number of other areas that are also important, we will get to those in our next post.

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Contribution by: Michael Anthony Lloyd is a Mortgage Expert with DLC Canadian Mortgage Experts

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  1. Great post! It’s all a learning process. I didn’t realize how many expenses came with getting ready to buy a house, and I also wish I had been able to put down a bigger down payment! But you can always match payments, make extra payments a year, make bi-weekly payments instead of monthly, and this will knock the number of years paying down:)

  2. I work in a law firm (Real Estate Dept) and one big mistake I see is not getting a home inspection done. It usually cost around $300.00, but it is worth every penny. Looks can be deceiving.

  3. Great article. It’s alarming how many of our acquaintances are house poor because they took their mortgage qualification to be the value of house they could afford. The unexpected costs add up so quickly, too; a budget with plenty of leeway is a must when it comes to buying a home.

    1. SO many people get themselves into trouble getting a mortgage after the bank tells them they can get x amount. We spent well under what the bank offered us and are VERY happy. Our mates with the nice big houses.. well that’s ok I still like getting up without a headache in the morning. Cheers for your post. MR.CBB

  4. It’s gonna take me quite alot of couponing for me to able to buy a house 🙂 But one day I will have my own house!!

  5. Being informed is something that a lot people don’t want to do. They just want to buy a house without knowing how it happens, except for paying the mortgage. So many of my friends are house poor, I don’t want to join them. I’d rather have an older house, that I can afford, than a shiny new one that costs me too much money. You have to have money to live too.

    1. That is true and it’s not just housing its their finances overall.. people turn their heads until the creditors come knocking.. or they have to go into consumer protection or ultimately bankruptcy. There is no excuse for ignorance. Mr.CBB

  6. Really check around, we just renewed and all our bank did was send us papers to sign to keep our morgage with them, i dont work that way I want a person to give me the bottom line of what I am paying out and waht the payment is for, we ended up with a 4yr morgage at 2.9% a big difference from 4.9 our bank wanted us to renew at.

    1. Wow I would have been happy with a 4 yr at 2.9 good for you. I hope after our 5 year is up our house is paid in full or we will simply figure out the cheapest route to rid of it. Cheers and thanks for your post Laura! Mr.CBB

  7. Not bought my first home yet but some good info…looking forward to that when it does happen! thanks so much for the blog

  8. When my husband and I bought our third home they pressured us so much to get into a mortgage that was more than we could afford but luckily for us we still owned our last home with unreliable renters! Yes I said LUCKY because we didn’t want to overcommit knowing that they were unreliable so glad we didn’t!!!! We have a 1500 sq. foot brick rancher that is the perfect size for the four of us sometimes its tight especially with guests but it is manageable!

    1. That is the problem today so many people go in over their heads. Our home is 1500 as well with another 1000 in the basement and we LOVE IT… we spent well under budget and couldn’t be happier.. and to all our mates struggling to pay off their show home I say.. looks good on you…Cheers Mr.CBB

        1. That’s ok we never had a basement in the UK when was growing up. In fact I don’t know anyone who has one in the UK so it’s awesome!! My mates dig it! lol…Our sunroom is 3 season to get it up to 4 will be a 10k upgrade.

          1. Well I will have to blog about it once we finally add it on…..we of course will do it on a shoe string…….I miss my basement and our land we had in Maryland and our family of course but thats the only thing I miss…I certainly don’t miss the traffic and the long commutes…I drive 7 miles to work the only thing that would be better is if I worked at home 🙂

  9. Great article! I was overwhelmed by all of the costs that I didn’t know about or think about when I bought my first home. I wished I had saved more for them and for the down payment (just payed the minimum). I did go and find out what I could afford. The other thing I did that I wish I didn’t was I spoke to a banker who said that if I took out a large RRSP loan then I could use the tax refund towards a down payment and also withdrawl under the home buyers plan. I felt like that was a big mistake. Most of my RRSP contributions now go every year to paying it back instead of giving me a tax break. I’ll be doing this for 15 years! (10 more to go! lol)

    1. Thanks for you comment Jen. Sounds like you learned alot of lessons along the way and during the process.
      It’s not always a bad thing to learn from our mistakes it just means the next round we are armed with all the knowledge we need. Cheers Mr.CBB

  10. thank you mike for the very useful knowledge, we dont own a home, so i hope some day when we can, these would be very useful and helpful, thank you CBB and Mike!!!! keep up the good work!!!

  11. When we bought our first house I was really thrown by all these “additional” expenses we suddenly faced. We were not fully prepared for what we getting thrown into. We did have a good realtor but was frustrated when he kept showing us houses without a garage when we clearly stated a garage was a must have. A GOOD house inspector will save you from buying a home that requires care not in your present budget too. I had never heard of a mortgage broker until recently and wonder how much difference that could have made in our experiene…just I only use an insurance broker 🙂

  12. As a future potential first time home buyer this is some good advice. Never really knew there was much difference from a mortgage broker and a rep from the bank. I especially like the advice about speaking to the specialist first to help determine what you qualify for and can really afford before even looking for a house, it could sure avoid big disappointment or as you mentioned a purchase that could make you house poor. Thanks!

    1. We used a broker when we bought our house as they gave us the best rate. They also gave us everything we wanted in a mortgage. It’s so important to know what you can afford before you buy. Make sure you have a budget . We lived and paid rent like we were paying a mortgage and saved that money in a savings account. I’m happy we did that. Cheers and thanks for your comment. Mr.CBB

  13. We were pushed into buying our home by family, and we did EVERYTHING wrong! Would have been nice to have had information like this 6 years ago 🙂

    1. It’s amazing how we learn about what we should have done differently. The most important part is to share the knowledge so others don’t make the same mistakes. No one should be pressured to make the biggest purchase of their lives. Well for most of us it is. Thanks for your comment Rhiannon.

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