Are you considering the purchase of a new home? Purchasing a new home is an exciting endeavour, but it’s important to be aware of some common yet avoidable mistakes real estate buyers make.
Not Having an Accurate Budget
Buying a house is a serious event…in fact, it can be one of the most impactful events in your life! If you want to get the best home for you and your family, the first step is to accurately determine the right budget for your home buying goal. This is an important reality check and will save you time and energy by not looking at properties that you can’t afford. A mortgage pre-approval is highly recommended for these purposes.
Another benefit of knowing which potential homes are within your budget is to avoid accumulating chronic debt as a result of high mortgage payments. This is why choosing an experienced agent from Wowa, the Amazon of Real Estate Agents, is always a smart investment. You also need to keep closing costs in mind, especially the land transfer tax, that may cost you up to 3% of the property value and even more if you live in the City of Toronto.
Not Every Real Estate Agent Is Right for You
Choosing a real estate agent can be quite tricky; many people have real estate agents in the family or as friends. But just because real estate agents may be family members or friends doesn’t mean they have a good knowledge of properties in the neighbourhood in which you would like to buy. It is a much wiser idea to hire an experienced realtor who has expertise in your chosen neighbourhood.
Best Mortgage Rates
Sometimes, we are tempted to gloss over values as though they mean nothing; until they mean a lot! Do you know that even a 0.2% lesser mortgage rate can save at least $5,000 over 5 years for a property costing $500,000? When shopping for your new home, negotiating the best mortgage rate available could save you a lot over time. Keep in mind that mortgage rates offered by your bank’s mortgage specialist can be negotiated.
Wrongly Estimating Future Costs
In the midst of the excitement that you feel at the thought of purchasing your dream home, it’s important to remain practical by being aware of future expenses. Have you calculated what your (correct) monthly mortgage payments would be? Are you aware of your property tax amount? What about condo maintenance costs? Condo maintenance fees in a new building are often unusually low to attract potential buyers, but can increase significantly within a few years. All of these expenses must be considered so that you do not find yourself “house rich and cash poor”.
Not paying enough attention to the location of a potential home is one mistake you do not want to make since you will hopefully be living in your new home for several years. Your real estate agent should be able to advise you of surrounding amenities such as schools, transportation and shopping malls. You should walk around the neighbourhood to be sure you feel comfortable and safe and you could even try to talk to a few neighbours to learn more about the neighbourhood. If there is a new development scheduled near your potential home, find out exactly what will be built. Otherwise, you may end up with a 15-storey condo looming over your backyard. Further, if your dream home is not located in a safe neighbourhood, you might want to reconsider making an offer.
These are the most common mistakes real estate buyers make. Please let us know in the comment section if you have other mistakes to add to the list.
You might be interested in reading, “How to Create Curb Appeal for Your Home“.