No matter how many times you’ve done it, buying a house can be tricky and painful regardless of your experience. Even expert house flippers have to deal with the ins and outs of real estate markets, financing and making sure the place isn’t crawling with asbestos. It’s just part of the process.
If you’re buying your first home, you’re prone to making some big (and expensive) mistakes that could mean getting a place you can’t live in or you can’t afford. You’re not going to be able to prepare for everything out there, but to be as prepared as possible, there are some things you need to consider before you move forward.
Before you look at neighbourhoods or even put together a wish list, figure out what you can afford. Go through the good old finances and put together a budget. Then cut it by 30 per cent. No matter how careful you are, there will be unforeseen costs that pop up and you need to have a little stash set aside so those surprises don’t bankrupt you. Thirty per cent is a good-sized cushion when you’re house hunting, and having a little more than that doesn’t hurt either.
After you have your number, look at it more comprehensively to figure out what you can afford in terms of location and home features. That will give you a better idea of where to start looking.
Do your homework, all of it
With online resources, you can research pretty much everything about a place and you should definitely take advantage of that. Not only can you check out what shopping, schools and recreation centers are nearby, you can look up what other houses are selling for in that area, crime rates, traffic flow and any specific amenity right down to how many swings are at the local park. Do as much research about an area as you can.
Doing all this research online means that you can also check out many different areas of a city or even multiple cities in the course of a few hours. Don’t stick to a specific area unless you need to. You might find hidden gems in other locations outside of where you were initially looking.
Get pre-approved for a mortgage
The housing market moves fast, especially in and around big cities or in desirable neighbourhoods. Getting pre-approved means that you won’t be scrambling to get a mortgage when your dream house comes along and you can pounce on the perfect place when you find it. You don’t want to be in the situation of loving a house but finding out you can’t get a mortgage big enough to pay for it.
Save for a down payment
It might seem appealing to put down as small a down payment as possible and leave the rest to the mortgage, but that’s how a little thing called “the 2008 recession” happened. It might be exciting to find out that you have just enough for a down payment on a home but it’s better in the long run to save a bit more and put down a larger lump sum. Sorry to be the bringer of bad news, but the smaller the down payment, the bigger the mortgage. You don’t want to be stuck with monthly payments you can’t make because you needed a house now.
Dig deep during the home inspection
Don’t let your love for a house blind you to the serious underlying issues it could have. You’ll quickly fall out of love if it’s infested with mold and crumbling at the base and you didn’t build structural renovations into your budget. You should definitely bring in a professional and make sure that you’re also checking behind the curtains, paintings, furniture or anything else that could be used to hide damage in plain sight. You have that 30 per cent stashed away, but if you need to gut the place, that’s not going to cover it.