Are you a first-time buyer hoping to find your dream home? Stop and take a look at the common mistakes of first-time buyers so that you don’t get trapped.
Not thinking long term
Your family will grow and your needs will change. Clearly determine your needs by thinking long term. Moving is expensive, so ideally you should avoid moving too often.
Not budgeting for all home ownership costs
When you purchase your first home, you need a comprehensive budget that takes into account all the costs associated with this major transaction. You should make provisions for inspection and notary fees, moving expenses, home improvements (painting, decorating, accessories, etc.), furniture, equipment, transfer costs, municipal and school taxes, insurance, maintenance, etc.
Getting caught up in looks
All too often, first-time buyers are swept away by the cosmetics of a property. Staging a home can definitely make it more appealing. It enhances the overall look and feel of the property and makes a fantastic first impression on visitors. However, don’t be distracted by furniture and décor. You need to objectively assess a property’s potential; otherwise you could miss out on a great opportunity.
Underestimating how much work is involved
You may find a property that meets all your needs but requires a little work. Are you sure you know how much work will be involved? First-time buyers tend to think major work will be pretty easy to do. In this situation, you need to ask yourself 2 things: Can I do the work myself? If not, can I afford to pay someone to do it? Even if you’re handy and not afraid of manual labour, keep in mind that buying a home is in itself a major project and you shouldn’t take on too much.
Not questioning mortgage approval
Your financial institution is ready to finance your project. You are satisfied with your mortgage approval and are ready to shop for your first home. Wait! First-time buyers all too often underestimate the sacrifices of homeownership. Think about your interests, hobbies, sports, desire to travel, etc. How much are you willing to sacrifice? Make sure your mortgage fits your lifestyle.
Relying on the advice of family and friends
No one can walk in your shoes, not even your own family! Visiting a property with your family or friends can be a help or a hindrance. The real estate market is changing quickly, just like the building code. The standards for replacing a shingled roof in 2014 are not the same as they were in 1999. Your cousin the roofing expert may see a major defect where there isn’t one. Or your father may tell you that paying $225,000 for a home is totally crazy–because he paid $55,000 for his home in 1985–but it’s probably a bargain in today’s market.
It is surprising to note that people are outraged at having to pay an extra 5¢ for a litre of gas but hesitate to negotiate the price of a property worth tens of thousands of dollars. Do your homework to determine the fair price of the home you’re interested in and negotiate! Nowadays there are tools available to help you evaluate the fair value of a property. If need be, you can call on a certified appraiser. It will cost you $300 or $400–but you could save $2,000!
Not asking the building inspector enough questions
Not only do first-time buyers rely too much on the advice of family and friends, they do not take full advantage of the expertise of building inspectors. Having a building appraised also means getting to know it. It means going around with the building inspector and asking questions. This is the time you should check out the points raised by your family and friends. Take advantage of your building inspector’s visit by asking all the questions that go through your mind during the tour.
Overlooking the legal aspects
Buying a property involves a number of legal aspects. You will need a notary to finalize your transaction. Throughout the process you will also need the expertise of a real estate agent, unless you buy a property directly from the owner. In this case, you need to be well informed. You are undoubtedly on the verge of making one of the biggest transactions of your life, so get help. Consult your notary–he or she will be able to guide you.
To learn more about the housing sector or to get expert advice from the largest mortgage lender in Quebec, go to www.desjardins.com/home
Source: Isabelle Paradis | Desjardins, with the collaboration of Josée Lortie, personal financial advisor, Caisse Desjardins Thérèse-De Blainville