What property types should you consider when buying a home? Here are some key factors to understand when making your decision!
Are you getting ready to buy a home? There is a ton of preparation involved in the purchasing process, and it’s easy to feel overwhelmed. Plus, buyers often make some common errors that can make the experience feel even more stressful. We’re here to point out these home purchasing mistakes to you now, so you can avoid them in the market. Here’s what you need to watch out for!
#1 Not narrowing down your needs
When you enter the housing market, your options initially seem overwhelming. With a huge variety of property types, locations, and prices, it’s hard to know where to even start. However, a big purchasing mistake is diving in without narrowing down your specific requirements. You should have a good idea of what kind of home you want, what it must have, and what you can live without. This will allow your real estate agent to narrow down potential properties more quickly for you. Of course, this means you will hopefully find your dream home sooner! The housing market can move fast, so it’s important to go into it with a clear idea of your needs. Otherwise, you are likely going to waste a lot of time and energy exploring properties that aren’t a good match for you.
#2 Budgeting improperly
Another one of the biggest home purchasing mistakes is not taking the time to work out an accurate budget. It’s extremely important to buy a home you can afford, and the only way you can ensure this is to have a clear budget. Your budget should consider your income and expenses, plus any other debts you have. Your real estate agent can help you turn these figures into a realistic budget. Many people who purchase a home beyond their means end up becoming house poor. This means they have to spend a majority of their income on housing costs, often at the expense of other necessities. This causes unnecessary stress and anxiety that can largely be avoided with a proper budgeting process.
#3 Not getting pre-approved
Of course, we can’t forget about the importance of a mortgage pre-approval! We discuss pre-approvals all the time, because they are one of the best tools for home buyers to have during the purchasing process. Your pre-approval gives you an idea of what mortgage amount you could afford based on your current financial situation. It is the amount a lender would be willing to finance, and this helps you plan your next steps. If your pre-approval is in the right range, do your best to maintain your current situation so you can secure your approval down the line. If you were hoping for a higher pre-approval, you can take action to improve your finances before you apply for a mortgage. Buyers who don’t get a pre-approval are much more in the dark about their finances, and are more likely to be disappointed
#4 Forgetting to budget for closing costs
Since closing costs come at the very end of your purchasing journey, it’s easy to forget about them. Saving for a down payment usually takes priority, but it’s important to make room in the budget for these final expenses! Closing costs are things like legal fees, land transfer tax, and moving costs. You can learn more about common closing costs here. The general guideline is to expect closing costs to be equal to about 1.5 per cent of the purchase price of your new home. While it’s not as huge as a 20 per cent down payment, it’s not something to forget about either!
#5 Not working with a broker!
Finally, trying to buy a house without a mortgage broker is one of the worst home purchasing mistakes you can make. A broker is your key to securing the right mortgage product, lender, and rate. Many lenders will only work with buyers who come through a broker. Plus, brokers have access to the best products that aren’t available to everyone. The best part is brokers usually don’t cost buyers anything to use. However, it can be very costly to not use one! Make sure you call upon a broker to be part of your team during this purchasing process.
Buying a home is an exciting experience, and it’s even better when you take the least stressful path! Avoiding these mistakes will help smooth the process and allow you to enjoy the journey. As brokers, we are ready to navigate the market with you and make sure you secure the perfect mortgage.
If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.