Buying a house is a huge step to take especially if it’s your first home. You will be putting yourself into strategic debt and with that, comes some risk, but in the end, the risk will probably be worth it as buying a house and building a home for your family is priceless. We’ve put together a list of our top unconventional tips for the first time homebuyer.
Consider The Long-Term Investment
While you should be investing in a house that you want to live in now you should also consider that a house is a long-term investment. Think about what you need and want now but also take the time to think about the future, whether that’s raising a family for many years to come or reselling in the near future. If you plan on staying in the house indefinitely then consider what you’ll need from it and the location. But if you like to move around or know that you won’t be staying too long then think about its resale potential.
Make Lots Of Lists
Almost everyone has a list of things they’re looking for when buying a house, but you should consider having more than one list. Have a list for the absolute must-haves, a list for the things that you would like but aren’t necessary, and even a list for the things you do not want. This way if you end up looking at several houses you won’t get confused and forget what you’re actually looking for. This will help to take some of the emotion and guesswork out of buying a house. It’s an investment, so you want to make an informed decision not a rushed and emotional one.
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Keep In Mind All The Extra Expenses
Buying a house comes with a lot of obvious expenses but when you’re making your budget don’t forget these expenses as they could make or break your budget in the long run.
- Transportation/ commute to work / gas
- Added costs (pool maintenance, lawn upkeep)
- Any renovations you want to be done
- Potential interest rate increase
- Mortgage default insurance
Add these extra expenses to your budget and make sure you can still comfortably afford the house you want. Try doing a test-run. Pretend you’re making your mortgage payments for a few months and see how you do. Are you able to get by comfortably with your new expenses?
Be Aware Of Your Homeowners Association
Not all neighbourhoods have homeowners associations but if yours does you need to ask for the contract. If you are planning on renting out a room or the whole house knowing the details of the contract is essential. Just make sure you are informed before you buy the house.
Think About Other Forms Of Funding
Mortgages are the most common form of funding when buying a house but it’s also a good idea to look into other options, a little extra help never hurts. You would be surprised about how many other options there are, including different kinds of grants and even personal loans. Many of these options may have limitations but they aren’t too strict or obscure. While you might not qualify for any of them it’s always better to try then simply assume that they aren’t for you.
Read Your Contract
This one might be obvious to most consumers, but you’d be surprised about how many people never really read their mortgage contracts. Buying a house is one of the biggest decisions you’ll probably ever make and definitely a huge investment, so read your contract. Understanding your contract is extremely important. Don’t simply assume or trust that your real estate agent has told you everything you need to know. Knowing for yourself and your future is the best thing you can do.
Research Your New Neighbourhood
Knowing the demographics of the neighbourhood you’re hoping to buy a house in could ultimately help you make your final decision. If you have children but the neighbourhood is full of single people will you and your children be happy there? And vice versa, don’t settle for a location that you aren’t 100% happy with, do your research and prepare yourself to make an informed decision.
Buy The House And The View
If you hate the neighbourhood or the view from your living room window then do not buy the house. Liking the view is just as important if not more important than liking the house. You can always renovate the house and make small or large changes to it but you can’t do anything about what you see outside your windows. Don’t let yourself settle on a bad view just because you like the kitchen or bathrooms.
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Ignore The Staging
A staged house really does look better but most of the time the setups aren’t practical for your own living situation. When looking at a house that has obviously been staged try to look past the layout of the furniture and picture how you would live in the house. Focus on the important parts like the size of the kitchen or bathrooms and whether or not you’ll need to do a lot of improvements, not how the couches and chairs work well with the colour of the walls.
Do A Test-Run
Pretend you’re making your mortgage payments for a few months and see how you do. Are you able to get by comfortably with your new expenses? If not, you may want to consider looking at houses in a lower price range or come up with a realistic budget that will allow you to better manage your money.
Choose The Right Amortization Period
Your amortization period depends on your situation, but remember that a shorter amortization period means bigger savings over time. You can save on interest this way, despite the higher monthly payments.
Don’t Forget About All The Tried And True Advice
Now that you have some unconventional tips to think about while buying your first home, don’t forget about all the tried and true advice.
- Make sure you have an emergency fund
- Have a down payment of 20% saved. If your down payment covers 20% of the value of the property, you’ll avoid paying mortgage insurance
- Do not under any circumstance buy a house you can’t afford. It’s a good idea to evaluate your numbers and, make sure you don’t overextend your budget
Finding The Right Home and The Best Mortgage
There are a lot of things to consider when buying your first house: contracts, the neighbourhood, money, the future and endless expenses. Try to remember that you’ll be fulfilling your homeownership goal and when you’re ready to learn more about your mortgage options, Loans Canada can help.
Note: Loans Canada does not arrange, underwrite or broker mortgages. We are a simple referral service.