Buying your first home is a HUGE deal! It’s an exciting, stressful and overwhelming time. And more often than not you will feel like you are in way over your head. I remember all too well the whirlwind of emotions throughout the buying process. As a first time home buyer, you want to enjoy the process but it’s also important to go in with your eyes wide open. It can be way too easy to make mistakes and get yourself into trouble.
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.
My Homebuying Experience
When we bought our first home (almost eight years ago!), we moved fast. I know some people take months to find a place, but we started looking and had an offer accepted within a week. The house we ended up buying was actually the very first one we looked at. It was initially priced right at the top of our budget, and that worried me. We looked at a bunch more places that first weekend but nothing compared.
Then, we got a phone call letting us know the owners of that first place dropped the price…by a lot! The bad part? That new price was tempting enough and we got into a multiple offers situation. 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.
I can’t stress enough how important it is to have a real estate pro in your corner. We were lucky to have a close family friend act as our realtor. She walked us through the process and gave us so much valuable advice. As a buyer you don’t actually pay your realtor; that comes out of what the seller gets. Honestly, there’s no downside so find someone you trust and let them handle the hard stuff.
Getting Too Emotional
There’s no denying the fact that buying your first place is an emotional process, but you have to keep your heart in check. That stunning fireplace might catch your eye as soon as you walk through the door, but does that really compensate for no upstairs shower? Ok, that might be a bit extreme, but things like this happen.
Designers and real estate agents, especially in brand new homes, are masters of deception. They can wow you with the great aspects of a house while distracting you from the not so good.
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. They’ll be able to give you a reality check if it’s necessary. 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
If you’ve never been pre-approved for a mortgage, there’s a good chance you’ll be shocked at how much the bank is willing to give you. Seriously, some of the amounts are nuts. Do not take this to mean that you can actually afford to spend that much.
Before even thinking about buying a home, you should have an excellent handle on your budget and how much you can afford to pay towards a mortgage every month. The last thing you want it is to be ‘house poor’ and not be able to do the things you want to do. Thinking you can lower your expenses to afford a home by eating out or shopping less will make you miserable and is a recipe for disaster.
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 but you’ll come away 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.
In 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 avoiding a long commute from the suburbs. It also means living in a home that is affordable. Owning a home doesn’t mean I’ll suddenly want to stop eating out or having the odd Sephora splurge. Maybe those aren’t things you value. You might place greater importance on having a big, brand new house. 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 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?
This post was proofread by Grammarly.