Common Mistakes First Time Home Buyers Should Avoid:
The housing market is hot, thanks to favourable interest rates, and lower volume of inventory. But along with a hot housing market comes increased competition for homes.
Given the complexities associated with the costs of buying a house, jumping into the market and effectively competing with aggressive bids can be daunting. If done wrong, a home purchase can result in enough financial regrets to last a lifetime for first-time homebuyers.
1-Choosing a Risky Loan
Talk to a mortgage broker to get information on various types of mortgages – there are mortgage loans for every person and situation. However, if you don’t educate yourself which suits you best, this increases your chances of selecting one that’s too costly .For example, some buyers choose a variable mortgage rate to receive a lower interest rate early on, but they fail to realize that their rate and mortgage payment may increase in the future.
2- Overspending on a House
Lenders determine affordability based on the information listed on your credit report and your tax documentation. But sometimes, lenders approve applicants for a loan larger than they can afford. Rather than being excited and accepting the higher mortgage loan, be smart and stick to your original price range. Remember bigger homes usually have more expensive bills.
3. Skipping the Home Inspection
Home inspections are required when buying a house. Buying a house without an inspection is extraordinarily risky because serious problems can exist with the electrical wiring, the plumbing, the roof, or the foundation. An inspector can identify problems before the closing, and you can then ask the seller to fix these problems. If you buy a house and skip the inspection you’re financially responsible for any problems that arise after closing.
4. Not Shopping Around
Save money on your first home purchase by simply talking with different lenders. Interest rates and closing costs vary among banks, and if you want the best rate and the cheapest costs, obtain multiple quotes. Get quotes from at least three different banks or lenders. Compare each quote to determine the best option. Factors to consider include the mortgage rate, closing costs, down payment, and a potential prepayment penalty.
5. Not Visiting the Property Multiple Times
There’s nothing wrong with bidding on the first house that you see. However, plan to visit the property at least twice before submitting your offer. After the First visit to the property, go home, sleep on it, and return later. In the meantime, drive through and check out the neighbourhood during the weekends and evenings. Is there loud music? Are the children playing in the streets or being noisy? Checking out the neighbourhood when the majority of the residents are home can help you determine whether the area is a good fit for you and your family.
6. Limiting Your Search
The majority of buyers have their hearts set on a particular neighbourhood or city. But why limit your search area? Some buyers want to live close to their place of occupation, or keep their children in a specific school district. Regardless, it’s worth checking out other areas. It’s possible for your child to excel in another school district, and you may have better home with less or the same cost.
7. Not Working With a Realtor
Before disregarding the importance of a buyer’s agent, understand that the seller’s agent has his or her client’s best interest in mind, not yours. They’ll offer you advice and answer your questions, but ultimately, this person is there to serve the seller. For this reason, a buyer’s agent can guide you in the right direction, help negotiate your bid, counter an offer, and organize the closing process. And since the seller pays both agents’ commissions, it only makes sense to have an agent on your side.