Buying a house is one of the biggest investments you’ll make in your lifetime. There is a lot to consider, and it can be overwhelming at first. Feeling prepared will help alleviate some of that stress, and there are a number of things you should consider in order to feel more prepared.
Here are seven common house hunting mistakes you should avoid during your home buying journey:
1. Not getting your pre-approval ready prior to shopping
Apply for a mortgage pre-approval as soon as you’re ready to start your house hunting journey. This should be your first step. A pre-approval will let you know whether you qualify for a mortgage, and how big of a loan you actually qualify for. This number is important for the home buying experience, but it isn’t the only reason why you should ensure you have it in place ahead of time. In a competitive market, you could lose out on your dream home if you don’t have proof of pre-approval. Having this ready and in place can position you as a more desirable buyer.
2. Thinking with your heart, instead of your head
Just because you were pre-approved for a figure, doesn’t mean you have to spend it all. Be sure to crunch your numbers, factoring in things like utilities, property taxes, and repairs. Try not to fall in love with something that may not fit your budget. It’s important to be practical; you don’t want to be “house poor,” where every dollar you make is going back into your home and there’s little room to enjoy other aspects of life.
3. Too many cooks in the kitchen
Remember, at the end of the day this will be your (or your family’s) home. Don’t give the opinions of those who aren’t footing the bill too much weight. You know what you want from your home, and not everybody is the same. Don’t feel pressured into buying something that isn’t right for you.
4. Obsessing over the aesthetics
Although it can be hard to envision yourself in a home with plastic-wrapped furniture and pink walls, it’s important to look past the cosmetic details and focus more on the bones. Wall colours, flooring, and hardware are all fairly low-cost features that can easily be changed. Focus more on things like storage, how the home is heated and the big-ticket items like the condition of the roof. The rest is easy to adapt to your liking.
5. Not hiring an agent
Navigating the world of home buying can be tricky and having a realtor in your corner is important. A realtor will guide you through the complicated process. They can find homes on your behalf, and are skilled negotiators — they can help you avoid costly mistakes or delays that could result in you losing out on your dream home.
6. Not having money set aside for closing costs
- Legal Fees: An attorney will look over and sign the paperwork associated with buying a home and make sure that the agreement is sound. The fees can vary but are usually between $500-$2000.
- Land Transfer Tax: When you purchase land, you have to pay tax. This cost is based off the purchase price. There is a rebate available for first-time home buyers in Ontario for this.
- CMHC Insurance (if down payment is less than 20%): This protects the lender in the event that you default on your mortgage.
- Home Inspection: Set aside around $500 for this. You can make it a condition of your offer.
- Other fees to consider: Moving costs, renovations, property insurance, and property taxes.
7. Not taking advantage of first-time home buyers incentives
There are a few benefits available for first-time home buyers that could save you big on your first home. Look into:
- First-time home buyers tax credit
- Land transfer tax rebate