When we bought our home (almost 7 years ago!), we moved fast. I know some people take months to find a place, but we started looking and had an offer in within a week. The house we ended up buying was actually the very first one we looked at, but it was initially priced right at the top of our budget, and that worried me. We looked a bunch more places that first weekend but nothing compared. Then, the owners of that first place dropped the price by a not insignificant amount, and we jumped on it. The bad part? Another couple did too, so we ended up having to sweat it out and see who they chose. Talk about a stressful day. We ended up hearing from our agent at 11:30 that night with the good news…the house was officially ours! Hearing that you just spent hundreds of thousands of dollars is thrilling, in both the best and worst possible ways but we made the right decision and have no regrets.
Buying your first home is so much more than just finding a house, getting a mortgage and then owing the bank a huge chunk of money. There’s a lot of factors to consider, and you need to make sure you’ve done your research. It’s common for first-time buyers (sometimes experienced buyers too), to make certain mistakes. Today we’re going to talk about a few of those so that you can avoid them…
Getting Too Emotional
To help keep your emotions in check, you should write out a list of all the essentials you have for your first home. And I mean REAL essentials! Talk this over with your agent, and they will be able to give you a reality check if it’s necessary, but once you have your essentials set it stone it makes it so much easier to stay focused. And really, you shouldn’t even be looking at places that don’t check off everything on that list.
Spending what the bank offers and not what your budget dictates
Run the numbers yourself and be clear with the bank (or your broker) if they try to get you to overextend yourself. Remember, they get paid based on the size of your mortgage, so there’s an incentive to get you the biggest mortgage possible.
Forgetting about Additional Expenses
Obviously, the most significant cost involved is the actual price of your new home, but that’s not the only thing you’ll be paying for. Closing costs, moving expenses, and insurance can all add up quickly and make those first few months in your new home more stressful than they should be.
This is especially an issue for first-time buyers who were living with their parents or in an apartment and are moving into a house. You will quickly realize that you have to now go out and buy things like snow shovels, a lawn mower, curtains, etc. There’s also a good chance that your new digs will be larger than your previous space and that means you’ll have to start adding new furniture to the mix. Planning ahead and slowly accumulating things over time can help you avoid a lot of large purchases all at once.
I’ve talked in more detail about closing costs before, so check out that post for cost breakdowns for lawyers, inspections, taxes, and more.
Skipping the Inspection
Getting an inspection done before you buy a home is non-negotiable. It will cost you a few hundred dollars, which is is basically nothing in the grand scheme, and you’ll come out knowing if the house you’ve fallen in love with is a good investment or a total dud. The inspector will also provide you with a detailed report outlining the life expectancy of such things as your roof, windows, furnace and hot water tank. That way you’ll know if you need to start setting aside money to replace your roof right away or if it should last you another decade.
It super hot housing markets (hello Toronto!), there can be a push to limit the conditions on your offer, and this could include removing the inspection clause. I get that competition can be fierce, but you still need to know what you’re buying. One thing you can do is actually get an inspection done before you put in an offer. That way there won’t be a condition to pass inspection
Buying a new house doesn’t get you off the hook from doing an inspection either. Builders can be sloppy, and it’s always better to know about deficiencies before moving in (you know, when you still have negotiating power).
Compromising on Non-Negotiables
Think about the lifestyle you want to live and find a home that will let you live it. For me, this means being centrally located and not having a long commute from the suburbs. It also means living in a home that is affordable so I can still afford to go out to dinner and have the odd splurge at Sephora. Maybe those aren’t things you value, you might place greater importance on having a big, brand new house than a long drive. And you know what? That is fine…it just has to work for you.
These are the priorities you don’t want to sacrifice when you are buying your first home. Be honest with yourself when you ask ‘Will this house make me happy?’ That might even mean you have to hold off on getting into the housing market. Don’t settle just because it’s the best you can afford. There’s nothing wrong with continuing to rent for a little longer to get into the house that will give you the amenities you want in a neighbourhood you’re happy to live in. The worst thing you can do is get stuck with a house that makes you miserable.
Are you planning to buy your first home soon? Or maybe you’ve already purchased a home and fell victim to one of these mistakes?