Top home buying mistakes and how to avoid them

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Like any big life decision or major purchase, buying your first home demands careful consideration, planning and preparation. However, not everyone has the patience and time to do the research. Some mistakes can and should be avoided especially if they end up costing home buyers a lot of money. Read on for a list of the most common mistakes first time homebuyers make, along with suggestions on how to avoid them.

Overbuying: Real estate experts say that one of the top mistakes first time homebuyers make is buying more home than they can afford. Make sure you have a good grasp of all the costs involved in homeownership, in combination with all your other expenses such as credit cards, car payments and other commitments.

Emotion over reason: Purchasing your first home is an emotional event and it is a moment that really changes your life. You will be excited but you need to keep your head. It may be your dream home, however, you can’t let your emotion take over your common sense. You may end up buying the wrong house or paying too much for it.

Settling for less: On the other end of the spectrum from overbuying, don’t settle for a house when there are most likely better options, if you look a little further. Research your finances, the neighbourhood and location on top of home specifics, so you know you’re making an informed choice.

Not getting pre-approved for a mortgage loan: Getting pre-approved ensures that you know what you can afford before going out into the market so you can be confident when it comes time to making an offer or negotiation. A pre-approval allows you to understand the real costs involved such as monthly costs and closing costs and, in addition, hold the rate so you are protected against rate increase. All at no extra cost! It is essentially a safety blanket.

Not knowing your mortgage options: You may feel loyal to and most comfortable going to your bank that you have banked with all of your life for your mortgage needs. Will they provide you with the best offer? The truth is they can’t offer you the best of what’s out there because they can only offer you what they have out of their own products. They may match or lower the rate offered just to keep you around. After banking with this institution for so long, you deserve the best up front. Finding the right mortgage can save you tons of money so be sure to shop around and take time to examine the best options. Meet with banks and brokers. Get a variety of products.

Going with the wrong location: Most first time homebuyers tend to stay in their homes for five to seven years. When you choose a home, you need to think about the factors that affect resale. Research the neighbourhood and pay attention to marketable details of the house. Consider how close it is to transportation, shopping, schools, parks and even look at local crime statistics.

Skipping the inspection process: The cost of a professional home inspection is a small price to pay for the peace of mind you get from knowing your future property is free of major defects. In the challenging market, today, vendors are even including an inspection as feature to help sell the home. You may want to contract your own independent inspection as well if the report is not recent.

Not shopping around: You shop around for small things, so why don’t you shop around for one of the biggest financial decisions of your life. Using a broker is the best way to shop around. You have your own personal shopper looking for the best mortgage deals for your situation and they represent you not the lender. They pull your credit once and submit the application to the best lenders on behalf of your best interest. If you decide to go it alone, you will end up frustrated and confused. It will be more time consuming and might hurt your credit.

Not reviewing the purchase contract closely: Real estate purchase contracts are long and detailed, but you must review them carefully, both on your own and with your lawyer. Read all clauses, covering everything from inclusions in the sale to closing dates. Many first-time buyers purchase condominiums so this is especially true for condo agreements which are typically longer because they cover maintenance fees and things like temporary occupancy fees on new builds. Read the fine print!