Skipping Mortgage Pre-Approval
Obtaining a mortgage pre-approval is a crucial first step before buyers spend the time looking for homes with their real estate agent. Even if you have a budget you would like to stick to, it’s important to verify that you can be approved for that amount.
Banks and lenders consider many different aspects of your financial standing before lending out a certain amount they believe is doable for you to handle. So, before your home search, make sure you know what exactly you are approved for to ensure your time and energy is not wasted searching for homes out of your price range.
Ignoring Additional Costs
Saving up just enough for the down payment is not enough. Being aware of the closing cost will help you prepare for your first big home purchase. Here’s a list of common closing costs you can expect when purchasing a home, though additional expenses may apply.
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Ontario Land Transfer Tax
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Toronto Municipal Land Transfer Tax (if purchasing within Toronto, this tax is in addition to the Ontario Land Transfer Tax)
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Legal Fees and Disbursements
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Title Insurance
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Home Inspection Fee (if applicable)
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Mortgage Insurance (if down payment is less than 20%)
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Adjustments (if applicable - property taxes, utilities, condo fees)
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Moving Costs
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Home Insurance
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Interest Adjustment (if applicable)
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HST on New Homes (if purchasing a newly built home)
Rushing the Decision
Market conditions can play a role on the “right time” to buy, however, making your first home purchase is a significant step. Most first time home buyers save up for many years and the anticipation once you're ready can feel very rewarding and exciting.
Rushing into a decision without careful consideration can lead to regrets down the line. It's essential to take the time to explore your options, understand what you can afford, and ensure the home you choose aligns with your needs and lifestyle. Working with a knowledgeable real estate agent can provide valuable insights and help you navigate the process with confidence.
Remember, patience often leads to finding a home that truly feels right for you.
Neglecting to Research the Neighbourhood
Choosing the right neighbourhood is just as important as finding the right home. Factors like school quality, commute times, nearby amenities, and the overall community vibe can significantly impact your day-to-day life.
Ask your real estate agent about future development plans with the areas you are interested in. It’s important that not all development plans are a good thing. Especially, if you’re looking to buy a home in Toronto, there might be plans for a new condominium to be built in front of the condo you’re interested in blocking the view or plans for new power lines which can lower property values due to the health and safety risks.
Making Big Financial Changes
It's crucial to keep your finances stable once you're in the home-buying process. Avoid changing jobs, making large purchases, or taking on new debts until after your mortgage closes. Lenders assess your financial situation right up to the closing day, and any sudden changes could raise red flags or even lead to loan denial. Keeping your credit score steady, maintaining your employment status, and sticking to your budget will help ensure a smooth closing process.
If you are preparing to buy your first home and would like a strategy to help get you there with confidence - reach out to our team today!