Home-buying 101: the 12 things to avoid when buying a home
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Buying a home can be exciting and overwhelming, all at the same time.
In fact, it can be so easy to get caught up in the rush of the home-buying process, that important decisions end up being made in a split second based on emotion rather than logic.
But we’re here to tell you that it’s okay to slow down a little. In fact, we encourage it.
To further guide you along the ups and downs of buying a home, our mortgage agents have put together 12 things to avoid so that your entry into homeownership starts off on solid ground:
1. Not understanding the full extent of your financial obligations.
Before you even entertain the idea of purchasing a home, it’s important to know exactly what added costs to expect—because there’s a whole lot more to buying than just the asking price.
2. Not getting pre-approved for a mortgage before you start the search.
This means going beyond filling out online mortgage pre-approvals and thinking your financing is set in stone. In other words, it’s a good idea to get a signed commitment from a lender BEFORE you sign firm on an offer to purchase. And just a heads up those lenders will want to check your credit/score, verify your employment, as well as your ability to make the minimum down payment.
3. Thinking that, as occasional staff, you can’t get (pre-) approved for a mortgage.
Some occasional and support staff have found it challenging to get a mortgage through other financial institutions. That’s why it’s important to always get a second, or even a third opinion. At Educators, for example, we specifically work with education members across all roles, affiliates, and life stages to find a mortgage that’s right for them. We can do the same for you.
4. Not filing your income taxes.
Lenders require your income taxes to be filed and up to date prior to even considering you for a mortgage. So, if you’re a year or two behind—you’ll definitely want to get on top of your taxes, right now.
5. Not studying up on down payments.
You have options when it comes to how much of a down payment you need to make. There is a conventional mortgage, which requires a minimum down payment of 20% of the purchase price. Or there’s a high-ratio mortgage—requiring a minimum of 5% down, but also requires mortgage default insurance.
6. Not taking advantage of the Home Buyers’ Plan.
Did you know that first-time homebuyers are allowed to withdraw up to $35,000 of their RRSP savings ($70,000 for a couple) to put towards a down payment? Plus if you repay it within 15 years, it’s not taxable.
7. Falling in love with a property at first sight without doing a home inspection.
While everything may look good on the outside, you never know what (faulty wiring or leaky pipes) is hiding beneath the surface. A home inspection can shed light on various issues and ensure you’re going into an offer with both eyes wide open.
Tip: It’s always better to get your own home inspection performed versus relying on an inspection provided by the seller. This way, you can rest assured the inspector acts in your best interest.
8. Putting in a ‘cold’ (I.e. low-ball) offer in a hot market.
Unless a home is in serious disrepair, you should avoid putting an offer in below market value for two reasons. First, it could seriously affect your ability to negotiate with the seller (as they may not take you seriously). And second, you’ll avoid disappointment. It’s a competitive market and you may have to bid on several properties before getting the right home, at the right price.
9. Ruling out fixer-uppers.
Sometimes you can save lot of money on the initial purchase price of a home by deciding to go with a property that needs a little extra love (I.e. updating). Then you can take your time doing renovations as your budget permits. Plus if you’re handy, you can save a lot of money doing upgrades yourself when you’re off during the summer (one of the perks of being an education member).
10. If you’re buying a condo—not reading the status certificate.
If you’re a first-time condo buyer, the status certificate is something that is often overlooked. However, this crucial document contains the financial and legal health of your condo board, so be sure to read the status certificate fully and also have it reviewed by your lawyer.
11. Forgetting that timing also plays a part in how much you may have to spend.
In the fall and winter, house prices may be lower. On the other hand, in the spring and summer, moving prices tend to be higher. The home-buying process is a delicate balance based on many variables and the time of year may impact what you end up having to spend.
12. Not being flexible/willing to compromise.
Unless the sky’s the limit where your budget is concerned, you may have to dial it back when it comes to everything you want in a property (I.e. location, size, condition, etc.). But that’s okay. There’s nothing wrong with compromise. While being flexible might not necessarily land you the home of your dreams at first, it will, however, keep you financially within your means. The ‘dreams’ part can come once you’re all moved in and settled.
As an education member, the most important thing to avoid during the home-buying process is not speaking with a lender that understands your specific financial circumstances.
That’s because with educator-specific things such as potential disruptions to your income during contract talks to making mortgage payments in the summer months, you have additional factors to think about when you’re ready to stop renting and start owning.
That’s where Educators Financial Group can help.
We take the guesswork out of the mortgage application process by going over all of your options. That way you’ll end up with a mortgage that best suits your needs, goals, and budget—no matter where you are on the pay grid, or what your income is in retirement.
Let’s chat about that home you’re looking to buy: reach out to one of our knowledgeable mortgage agents today.
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