For many people, purchasing a home is the biggest and most important financial transaction they will ever make. It’s crucial to do your due diligence during the home buying process, as mistakes can cost you thousands or even tens of thousands of dollars. Before shopping around for Calgary mortgages, make sure you’re an educated home buyer.
Here are the 15 most common mistakes home buyers, especially first-time home buyers, make:
1- Confusion. You need to know exactly what you’re looking for before you start shopping. It’s suggested to make a checklist of non-negotiable “must haves,” a “wish list” of home features you’d like to have, and a “deal killer” list of home types, neighbourhoods and other factors you want to avoid at all costs.
2- Failing to consider future needs. Is there any chance you will be adding to your family? Might you start a home-based business? Will your in-laws be moving in, or will adult children be moving home? Consider these “moving parts” in your home buying equation carefully.
3- Being unrealistic. Set a realistic price range on what you can afford and what you cannot afford at present. Also, remember to factor in the many hidden costs of real estate transactions, including mortgage fees, inspections, taxes and closing costs.
4- Putting in an offer without pre-approval for Calgary mortgages. Many would-be home buyers get tripped up by making an offer on a home, then finding they can’t get approved for the mortgage. Always get mortgage pre-approval before putting in an offer, and remember that pre-approval is better than pre-qualification. Pre-approval will also give you added leverage during the negotiating process.
5- Being a “cash poor buyer.” Drum up every dollar you can find for your down payment, as your mortgage terms will get better and better as your down payment rises.
6- Making banks your only source of lending. With the rise of alternative mortgage lending, home buyers are no longer bound to the banks they way the were in the past. If your bank won’t give you favourable terms, seek other financing sources.
7- Being uninformed. Always educate yourself on current market conditions, both in the general area and in the specific neighbourhood in which the home you’re considering is located. This will help you avoid overpaying for a home and will help you secure a better return on investment.
8- DIY home buying. It’s strongly recommended to retain the services of a realtor or real estate agent when shopping for a home. Simply put, they are professionals who know the ins and outs of the home buying process and have advanced understandings of market conditions.
9- Transacting real estate without a lawyer. A lawyer is another indispensable part of your real estate purchasing team. Real estate lawyers ensure your best interests are protected throughout all stages of the transaction.
10- Failing to do due diligence on the home. Always have the property looked at by a professional home inspector….or two. Also, make sure that any offers you make are contingent on a positive home inspection report, and use any flaws the inspector finds as leverage to negotiate a better sale price.
11- Ignorance of zoning codes and bylaws. If you’re interested in altering or adding on to the home, make sure you understand neighbourhood building codes and zoning bylaws before you buy.
12- Being emotional. Don’t let your emotions get the best of you. Whether you’ve fallen in love with a particular house or are growing frustrated with the negotiation process, always keep your feelings in check and let your real estate agent do the talking on your behalf. Remain as objective and neutral as possible at all times.
13- Choosing the wrong location. Is the neighbourhood on the rise or in decline? Are all the amenities and services you need conveniently located? How does the size and condition of the home compare to others in the area? These are some of the location-based questions you must answer before proceeding.
14- Bungling the offer. Low-balling a seller can be as damaging as overpaying, so be sure your offer is sensible, yet leaves room for negotiation. Don’t allow yourself to be pressured into making a deal before you’re ready.
15- Failing to follow through. There are pitfalls you should be aware of even if your offer has been accepted by the seller. Make sure the possession date is set in stone, that your home insurance coincides with your possession, and that the home is in the same condition it was in when you made your offer.
If you need further advice on the home-buying process or assistance in your search for Calgary mortgages, please contact me. As a leading independent broker of Calgary mortgages, and I have unique relationships with dozens of lenders. I will help you avoid these common mistakes and secure the best possible deal on your new mortgage.