The 5 Most Common Mistakes Made by First Time Home Buyers in the Waterloo & Wellington Regions
Buying a house - especially your first one - can be a stressful and overwhelming process. I'm sure if you live within the Wellington, Waterloo, or adjacent regions you'll know it's quite a competitive market for first time buyers. Knowing what to expect and plan for can help the process be an easier, smoother one. By anticipating and avoiding these common mistakes made by first time home buyers in Southern Ontario, you'll be able to set yourself up for a successful and less stressful experience.
NOT GETTING PRE-APPROVED
A lot of times buyers will ballpark what they think they can afford and don't talk to a mortgage professional until they find the home they are hoping to put an offer on and ultimately purchase. However, sometimes people don't take all of their expenses into account and end up over-estimating what they can afford. In order to get a better idea of your budget you should always speak with a local mortgage professional prior to seriously looking for a home. This will help you from the start to only be looking at houses you can afford and avoid any disappointment.
GETTING JUST ONE RATE
While it's important to get a pre-approval and speak with a mortgage professional, that doesn't mean you can only talk to one. It's best to talk to a few and shop around to find the best mortgage and rate that is going to work for you and your financial goals long term.
PURCHASING ABOVE YOUR MEANS
Once pre-approved and given an accurate budget, I find a lot of the time first time buyers start looking at properties for sale at their maximum. Just because you're approved for that much, doesn't mean you have to spend that much. It's important for buyers to keep in mind that their monthly expenses, debt service ratio, closing costs, etc. are not the only things to account for. You're buying a home - and with that comes the fees of homeownership - which are often over looked by excited first time buyers.
It's not just a mortgage payment.
It's closing costs. It's your monthly utility bills. It's your car payment. It's your groceries. It's saving for a rainy day. Therefore, sometimes it's best to buy below your maximum if you can to make sure you're not over-extending yourself.
MAKING A BIG PURCHASE BEFORE THE TRANSACTION CLOSES
Once you find the house and have an accepted offer but before the house is actually yours (i.e, before the day of closing and when you get the keys), I see a lot of first time buyers start planning for moving out and their new house. They want or need new furniture so they add it to their cart. The current fridge that comes with the house is old so they want to buy a new one. They have more space than their current apartment so they have room for more than one TV etc. The problem with this is the deal hasn't actually closed, and therefore the mortgage hasn't gone through. Depending on the lender you end up with, sometimes they run another credit check closer to the day of closing and if your visa is racked up with expenses you're not going to be in the best situation.
NOT TAKING ADVANTAGE OF FIRST TIME BUYER INCENTIVES
There are so many incentives out there for first time buyers in Ontario, but not all are advertised or mentioned and therefore not always taken advantage of. I find a lot of people know about the land transfer tax incentive for first time buyers (more on that here if you don't know or need a refresher), but there are others! Such as, the First Time Buyers Tax Credit, RRSP Home Buyer's Plan, GST/HST New Housing Rebate, The Region of Waterloo Affordable Home Ownership Program, and more. It's worth mentioning to your mortgage specialist to see what you qualify for.
Heading into house hunting with your eyes wide open will help you have a more successful and less stressful experience!