Feeling excited and a little overwhelmed at the thought of buying a home? You’re not alone — for most Canadians, this is the biggest purchase they will ever make, so it’s important to get it right. Read on for the five most common mistakes first-time homebuyers make, along with advice from the pros on how to ensure you don’t end up with buyer’s remorse.
Mistake #1: Falling in love with a house you can’t afford.
Going shopping for a home before making an appointment with a mortgage lender is a recipe for disappointment. Getting mortgage pre-approval gives you a realistic idea of how much home you can afford.
“It’s an assurance you’re not wasting your time viewing homes that are simply out of reach,” says Nikki Mayers, a real estate expert with Sutton Group-West Coast Realty in North Vancouver.
During the pre-approval process, the lender will run a credit check and ask you to provide proof of your income and assets. In return, you’ll get written confirmation that you qualify for a mortgage loan based on your current income and credit history.
Mistake #2: Choosing the house instead of the neighbourhood.
Mayers tries to help her buyers bring a sense of process to the house hunt. “Before we start looking, I get them to write a list of what they would like out of a neighbourhood in order of importance,” she says. “Things like commuter access, transit and good schools.”
Once you’ve narrowed down a couple of areas you like, she advises, familiarize yourself with them more thoroughly.
Morgan Dunlop, a sales representative with Real Estate Homeward in Toronto, suggests hanging around in a local coffee shop or simply strolling the streets to get a sense of the community. “A friend of mine who bought in Montreal actually tracked down people who lived on the street on Facebook and asked them questions,” she says.
Mistake #3: Blowing a lot on renovations.
As a rule of thumb, Dunlop recommends living in a home for a while before taking on expensive renos. Your pocketbook will thank you. But even more importantly, “you’ll notice the flow of rooms and how the light falls,” she says. Just don’t put off necessary work such as fixing the wiring or plumbing.
Mistake #4: Leaving yourself house poor.
With average house prices in Canada above $500,000 last year, buying a house is likely to stretch your budget to the max no matter where you live. But Dunlop has a simple fix to help prepare you for home ownership: “Figure out how much your mortgage is likely going to be [minus what you’re spending on rent] and put it away every month,” she advises. It’s good practice for home ownership and it will bump up your savings.
Mistake #5: Dispensing with an emergency fund.
“A home is almost like a living organism, and time and the elements are constantly eating away at it,” Dunlop says. An emergency fund provides a cushion to help cover the kinds of expenses that can arise for homeowners, whether it’s a leaky pipe or a new roof. “There are always surprises,” she says.