7 Big First-time Home Buyer Mistakes to Avoid
Buying a home is often the largest purchase a person will make in their lifetime, so it’s especially important as a first-time home buyer to avoid those common and potentially costly home buyer mistakes.
1. Know the difference between being pre-qualified and being pre-approved.
Prequalified means a lender has given you an approximate figure of what you can borrow, based on a few general questions about your income, debt and credit situation. For a pre-approved mortgage, a lender will take a more in-depth look at your finances and verify the information.
A pre-approval is a written confirmation indicating the mortgage amount you can afford, at a fixed interest rate, for a specific period of time (typically 90 – 120 days). It can help you take advantage of the best interest rates. Most Realtors® including Marnie Campbell, Calgary Realtor® will want you to have a pre-approved mortgage before searching for a home to ensure that you are looking in your correct price point and you know what your monthly mortgage payments will be.
2. Don’t limit your search to the Internet and open houses.
When working with a Realtor® you will have access to properties before they go on the MLS system as well as property information not available to the public. A Realtor can help you avoid missing out on the property you really want.
3. A first-time home buyer should think about resale before they purchase their first home.
It’s so exciting buying a home, sometimes you don’t think of where you will be a few years down the road. The average first-time home buyer only stays in a home for four years, so if you purchase a home that is very specific and not appealing to a general audience it may be hard to sell later on.
4. Understand For Sale by Owner (FSBO)
Understand FSBO's and the difference between buying from an unlicensed individual compared to buying from a licensed Realtor.It’s not same. A Realtor can explain the difference so you can make and informed decision.
5. Plan for closing costs.
Real Estate transaction closing costs are fees associated with the purchase of a home other than the down payment. In Alberta closing costs can mean legal fees, property tax and utility adjustment costs.
6. Do not change your financial picture.
Your financial situation needs to stay the same between the time you apply for a mortgage and the time you close on your new home, even after you have been approved. For example, don’t buy a new car, purchase major appliances using credit or change jobs during this time.
You want your financial position to be the same at the time of closing as you where when you were approved, or it could prompt your lender to revoke their mortgage commitment.
7. Find a Realtor who can fully explain the home buying process.
A Realor can make the home buying process easier, less stressful and help you avoid big mistakes.