Our Ottawa mortgage broker team knows that buying your first home can be both exciting and stressful. It involves a lot of paperwork and knowing what pitfalls to avoid along the way. If you aren’t aware of what to watch out for, it can end up costing you thousands more than necessary, and hours of frustration. In the worst-case scenario, you could face disappointment and not get the home you had your heart set on, because of a pitfall that could have been avoided. We have a list of the top pitfalls to avoid when buying your first home to help you out.
Pitfall 1 – Not Getting A Mortgage Pre-Approved
Getting yourself pre-approved for an Ottawa mortgage can play an important role when buying your first home. Sadly, many new home buyers skip this step, which can not only make the buying process longer but also have seller’s choosing someone with a pre-approval over your bid. A pre-approval is something seller’s like to see because it’s more of a guarantee that your bid won’t fall through at the last minute. It gives you an edge over those who don’t have a pre-approval and you also know how much you can realistically afford.
Keep in mind that a pre-approval is not the same thing a pre-qualification. Having a pre-qualification means that you have gone through the general steps of checking your credit score. A pre-approval means your financials were gone over in order to determine how much you have been approved to borrow.
Pitfall 2 – Using the Sellers Real Estate Agent
It’s not in your best interest to use the seller’s real estate or listing agent, which is a mistake we have seen many new homebuyers make. The reason for this is that you risk being in a dual agency situation, with the agent stuck between representing yourself and the seller.
The reason this is an issue is that the agent involved can’t really give you advice on what they feel the home their seller is offering is really worth. They also have their hands tied regarding negotiating requests for any repair work to be done once a home inspection has been done. Using the seller’s agent basically means you are giving up your rights to representation.
Pitfall 3 – Forgetting to Budget for Additional Expenses
Knowing how much you will need to buy a home and covering a downpayment aren’t the only things you need to factor into your budget. You need to have money set aside for the day to day running of the home too. You need to consider how much your monthly utilities will be, the costs of general maintenance, insurance for the home, and so on. We’ve seen buyers purchase a home at the high end of their budget, only to open themselves to financial stress because they didn’t factor in these things as well.
Pitfall 4 – Forgoing a Home Inspection
Another important step that some new homebuyers forgo are paying for a home inspection. This is really an important part of the home buying process though. You may feel like you are saving yourself some money at the time, but not having one can lead to bigger expenses, not to mention unwanted surprises, later on down the line. A home inspector can tell you whether a home is sound or will end up being a money pit full of repair issues. They will look for things like mould problems and structural problems that you can’t see yourself.
Pitfall 5 – Making Financial Changes Before Closing
Making any type of financial change before closing your deal can jeopardize you. Just because you have been pre-approved does not mean everything is in the bag. Before closing, the lender will go over your credit report again to see if there have been any major changes. They look for things like opening a new line of credit, changing jobs, or buying big-ticket items on credit. All of this can change how much you are eligible for with your mortgage and could see everything fall through at the last minute. Save those changes for after you have closed on the mortgage and home purchase.
If you have questions about buying a home for the first time and need to tips, give our Ottawa mortgage broker team a call today!