05 Feb 10 WORST FIRST-TIME HOMEBUYER MISTAKES
1. You Lack Vision
It’s worth putting a little sweat equity into your home and be able to afford something bigger. Its amazing the difference a painted wall, new appliances and some decorating can do to an out of date home. Try your best to see the beauty in ugly and focus on your necessities when buying ie. one-three bedroom, den or a back yard.
2. Compromising on your needs
Do not compromise and make your Realtor work for you. Tell them what you need and make sure you get it. There is no need to have additional space like a third bedroom or den if you don’t need it. The purchase of a home is a major investment. So make sure you get what you need, not what you want.
3. Unaware of what you can afford
If we have learned anything from the subprime mortgage crisis, it is that what the banks says you can afford and what you know you can afford are not always identical. Start by making a budget. Create a list of all your monthly expenses (excluding rent) and subtract this total from your take-home pay. What you are left with is how much you can realistically afford on your new home each month.
4. Getting caught up in the luxuries
People trying to sell their homes will make minor upgrades and inexpensive cosmetic fixes to increase the selling price. Look for homes whose full potential have yet to be realized. First-time homebuyers should always look for a house they can fix up and make better. Real Estate increases on average 4.4% a yr so buy low, fix and sell high.
5. Forgetting About the Future
Buy where you want to live NOW not where you think you will enjoy living in the future. Real Estate is too hard to predict so bet on a sure thing.
6. Avoiding Mortgage Qualification
Anyone looking to buy a home should meet with a Broker before house hunting or talking with a Realtor. Unfortunately that is usually not the case. In my experience the WANT comes before the NEED. People WANT a home but they NEED a Mortgage. Meet with a Broker, find out how much you can borrow. Then meet with a Realtor and together look for homes that fit your needs and within your budget.
7. Being Too Particular
First-time homebuyers often have to compromise on the features they wanted for their new home because their funds are limited. You may not receive everything that you wanted on your new home wish list, but it’s much better to be flexible than continuing to rent for longer than you really wanted to.
8. Forgetting to Inspect
Know what kind of shape the house is in before closing the sale between you and the seller. It would be unfortunate and costly to deal with unexpected repairs.
9. Not Considering Additional Expenses
Remember that there are additional expenses other than your monthly mortgage payment you will have to pay such as: property taxes, home insurance and repair costs. If you’re buying a condo, you’ll have monthly maintenance costs (Strata Costs) on top of anything else that needs to be fixed.
10. Not Working with an Agent
Once you are serious about buying always view open houses with an agent. FYI – Agents are held to the ethical rule that they must act in both the seller and the buyer parties’ best interests.