4 FIRST-TIME BUYER MISTAKES TO AVOID
Buying a condo home for the first-time is an exciting time. It’s quite possibly the most significant financial transaction of your lifetime.
You’re also making the exciting jump from renter to homeowner. While buying a place is something to celebrate, it’s important to do your homework.
Here are four of the biggest mistakes first-time homebuyers are prone to make and how to avoid them:
Mistake #1: Buying Too Much Home
Before condo hunting, it’s a good idea to get pre-approved for a mortgage. When you’re pre-approved, you’ll know exactly how much you can afford to spend on a home.
Your mortgage professional is going to tell you the maximum amount you can spend, but keep in mind, that doesn’t mean that you should spend the entire amount.
Set a budget and take some time to crunch the numbers and see if you can afford the mortgage payments on a monthly basis. Don’t forget to take into account property taxes and condo fees.
You’ll want to leave yourself some financial breathing room in case mortgage rates go up or you run into a financial emergency.
By overspending on a condo, you could find yourself “condo rich, cash poor,” with very little money to save, let alone to spend on having fun (you may have to say goodbye to dining out at restaurants and going on vacation every year). Don’t make this mistake.
By buying a condo within your buying limit, you’ll be better prepared the next time life throws a financial curveball at you.
Mistake #2: Forgetting to Budget for Closing Costs
If you’ve never bought a condo before, it’s easy to overlook closing costs.
They’re just a drop in the bucket, right? Wrong. Closing costs can add up to four percent of your home’s purchase price.
And your lender won’t cover these costs, so it’s your responsibility to put this money aside in addition to your down payment.
Examples of typical closing costs include land transfer taxes in some provinces, real estate lawyer fees and home inspection fees.
Mistake #3: Buying Based Solely on Looks
Have you ever stepped foot inside a condo and it became love at first sight? You see everything you’re looking for in a condo: granite countertops, stainless steel appliances and an open kitchen. You’re ready to make an offer right then and there.
But before you do, take the time to look at the layout and make sure the location (even your travel time to work) works out well.
Don’t get distracted by the stuff that “wows” buyers. You want a condo that’s the sausage and the sizzle, not just the sizzle.
Mistake #4: Never Ever skip the Home Inspection
In red-hot property markets, a new trend is for buyers to skip a home inspections or document review. And it makes kinda sense – when you’re competing against 6 other buyers for a great condo, you won't want too many conditions - but you HAVE to look for any red flags with inspections.
What’s worse than losing your dream place? Winning what turns into your nightmare.
An inspection (and especially a document inspection) sounds like a lot, but once you get the report you’ll be happy you did. The report will provide you with a handy checklist of all the things you should do to make sure it is in great shape, and the documents will point to the finacial side and how well the conmplex is run. Don’t cheap out on these.