First Time Home Buyers Beware!
2014/04/03

"Inexperience could cost thousands!"

As with everything in life, when you are starting out with a new project, you have a lot to learn. Being a first-time home buyer is no different, and the purchasing process should be approached in much the same way.

Before you set out to purchase, you need to gain an understanding of Real Estate and your market position. Knowing what you can afford is as critical as finding the perfect home. What's the point in getting excited about a potential new home if you can't afford it?

This transaction will likely become your largest asset ever, so there's little room for errors caused by lack of knowledge or by inexperience. Buying your first home can be an intimidating task, but you can ease your fears if you simply slow down and take the process one step at a time.

Below is a list of Do's and Dont's designed to assist first-time buyers in achieving their home owning goals without feeling the panic-inducing stress that is often associated with making your first purchase of this magnitude.

The list focuses on areas first-timers typically stumble over in their initial home buying attempts. Simply knowing what you could face in the market will help you avoid some of those trip-ups.

The Do's

Step 1 >>>

Examine your credit standing. This should be the first step in the process of journeying toward home ownership. If you do not have a history of borrowing money, it can count against you when applying for a large loan. If you don't have any credit cards or store accounts (Edgars, etc), consider applying for one simply to get the credit rating (just make sure you always pay it when it is due!!!). A credit check will be done by most financial institutions.

Step 2 >>>

You're going to need assistance in this process, so go ahead and line up your dream team of professionals. You may need a real estate agent, attorney, bond originator, home inspector and others to be your professional eyes during your home search.

Step 3 >>>

Buy for your lifestyle. Your first home will probably not be your last, so try to anticipate how long you'll live in your home and buy based on future plans. Various things like raising children, starting your own business, changing jobs, providing housing for your parents, etc. will all impact the size or type of home you need.

Step 4 >>>

Create a comprehensive budget that will assist you in figuring out your available finances. Separate your "wants" from your "needs" so you know where you can compromise to stay on this budget.

Step 5 >>>

Take your time in deciding on your home and make sure you have a clear idea in mind before you begin the process.

Step 6 >>>

When you visit a show house, check everything, including the light fittings, and ask the agent to disclose everything that is wrong with the house. This will assist you in realistically pricing the house (including fix-ups, etc.)

The Don’ts

Step 1 >>>

Don't get so taken in by the first house you see that you stop looking. Cultivate multiple options by keeping an open mind and spending sufficient time finding the right fit in a house and neighbourhood for your needs.

Step 2 >>>

Don't spend more than you can afford. Banks will often lend you as much as your financial condition will allow, but to stretch yourself too thin means that you may not be able to purchase other things that you want (like a new TV, washing machine, etc.)

Step 3 >>>

Don't try and time the purchase of your house against perceived market trends. The value of a home will appreciate and depreciate in cycles which are often difficult to predict.

Step 4 >>>

Don't appear too eager to purchase when you go to a show day. This will simply give the seller an advantage over you when the price negotiations start. Better to be clinical and approach the home as a business deal rather than a passionate purchase.

Step 5 >>>

Don't settle for the first interest rate that a financial institution offers you - shop around. Often your local bank will offer you a higher interest rate than a financial institution looking to gain a new client.

Step 6 >>>

Don't be scared to ask for assistance. Most issues can be avoided if you ask the correct questions of the correct people. Chat to other owners in the neighbourhood and talk to Estate agents who specialize in the area you are looking at.

Realty King IPG

RTS 04/13