November 18, 2015
The 4 Most Important Tips for First-Time Homebuyers
There are plenty of lists online describing the many, many pieces of advice for first-time homebuyers. We’ve scoured the web and have quizzed our experts to bring you these key points to keep in mind when buying your first home. If you have any others to add, leave them in the comments!
You should know when you buy your first home whether or not you plan on staying there for a while.
If you’re looking at a long-term commitment with this home, consider the many ways your family could change and grow:
Are you planning to have children? If so, do you have at least one spare room? Are you in the right neighbourhoods for schools and extra-curriculars?
Do you have aging parents that could come to live with you? If so, is your home equipped for canes, walkers, or wheelchairs? (Two flights of stairs could be problematic, for example.)
Repeat after me: I will not expect to sell my house in two years and reap a 150% profit.
Buyers have unreal expectations with re-sale. Many believe that because it’s a booming market, you can scoop up a home, splash on a new coat of paint, then turn around and sell it for double. Very rarely will a property increase in value quickly enough for this to work; your neighbourhood would have to incredibly and unexpectedly explode in value for this to be remotely plausible.
If you’re buying your first home to then sell it in a few years, that’s fine, but be pragmatic about it. Use other vehicles like investments if you want to grow your portfolio, and think of homebuying as a different platform altogether.
When most think of buying a home, they think of down payment, total cost, mortgage and mortgage payments, and maybe taxes and interest. The new house blinders need to be taken off regarding so many other expenses.
First, there are common recurring costs like utilities and property tax. There are one-time costs you’ll think of, like hiring movers and land-transfer tax, but there are also hidden costs you might not, like added commuting time and gas money.
It’s important to have a substantial amount of money saved for early emergencies, like the failure of an appliance or a fluke repair. Owning your own home costs money in all sorts of places that renting does not, so make a lot of room in your new budget for “miscellaneous.” Then, if you don’t spend it in a year, you can invest it, or even go on a trip!
Also, while on budget, keep in mind the simple idea that I’m sure you’ve heard before: don’t buy more than you can afford. Actually develop a fleshed-out budget and follow it. Don’t let a beautiful home sway you from your realistic goals; you’ll regret it a few months in when you’re strapped for cash.
Think home, not view
When you walk into a condo with a beautiful lake or ocean view, you’re tempted to buy on the spot. Imagine waking up to this!
Well, also imagine what would happen if a building popped up between your unit and that water. There are plenty of instances of growth that ruin a view. Instead of banking on your picturesque seascape, focus on the home itself. Think of the view as a bonus, in case it’s taken from you one day.
As an aside, also consider growth in the area, in general. Could you foresee your street becoming busier, were that field down the road to become a sub-division? It’s important to look at trends and what the future of your neighbourhood will be in ten years.
Flickr: Nan Palmero