8 Things First-Time Homebuyers Wish They’d Known

First-time home buyers have lots to think about. And each task can feel excruciatingly overwhelming — from building credit and saving money to applying for a mortgage, finding the ultimate dream home, and finally settling in.

Sometimes the decisions you make during (and after) the purchasing process can make your experience more complicated than it has to be, cause unnecessary stress, or even lead to long-term adverse effects. Knowledge is key to avoiding hard-learned lessons.

Keep reading to discover how you can have the most successful home buying experience possible by learning eight things other first-time homebuyers wish they’d known ahead of time.

Tip #1: Save For More Than Just the Down Payment

It can take several years to save for a home. Many first-time homebuyers make the mistake of aiming for just the down payment, forgetting or not knowing about last-minute expenses when closing. When budgeting your savings, be sure to factor in things like:

• Inspection fees
• Title
• Appraisals
• Escrow
• Moving expenses
• Repairs

Your realtor can advise you on other potential real estate transaction costs.

Tip #2: Improve Your Credit Before Applying for a Mortage

Your credit score affects the interest you pay on your mortgage. For example, according to myFico.com, applying for a 30-year mortgage with a credit score of 760 or higher will get you an interest rate of approximately 4.068%. Alternatively, having a score of 690, just 70 points lower, gets you a rate of about 4.467%.

So, what does this mean long term? Let’s say you apply for a $200,000 mortgage. At 4.068%, your monthly payment would be somewhere around $963.00. In contrast, the monthly payment would be $1009.00 at 4.467%. Sure, that looks like it’s only a $46.00 difference, but over 30 years, that “small” difference equates to $16,560.00! The takeaway? Secure a lower interest rate by improving your credit score before applying for a mortgage. If your score is relatively low, it can take several months to see an increase.

Tip #3: Being Pre-Approved Isn’t a Final Approval

It’s always a good idea to get pre-approved for a mortgage, but remember that a pre-approval doesn’t mean anything is final; it’s just the beginning of the process. The main difference between pre-approvals and final approvals is that pre-approvals generally have conditions. In contrast, final approvals have all conditions cleared, so you can go ahead and close the deal. Some conditions that may come with your pre-approval are:

• Paying off debts or obligations
• Requiring proof of additional income
• Providing documentation for a gift
• Selling your current home

Because these conditions take time to complete, start working on them as soon as you’re pre-approved. The sooner you clear them, the less stressful your home-buying experience will be. Clean approvals with no major conditions are in your favour when it comes time to negotiate.

Tip #4: You Won’t Save Money Buying a Home Without a Realtor

If you haven’t heard, buyers aren’t the ones who pay the real estate commission — the sellers do. If you’re looking for the least stressful way to buy a home, partnering with a local, trusted real estate agent is the way to go. Especially since it doesn’t cost you anything in commission! The right realtor is an invaluable ally. They will be knowledgeable in neighbourhood pricing, responsive to all your home-buying inquiries, help you find homes, negotiate contracts, and make the home-buying process less intimidating and as seamless as possible.

Tip #5: Don’t Skip the Final Walk-Through

Part of the closing process is a final home and property walk-through. This allows the buyer to have peace of mind knowing that their significant purchase is still in good condition. This isn’t something you should always “just assume”, especially if you’re buying a foreclosed property or displacing resentful renters. A final walk-through ensures you won’t be surprised later by any last-minute damage, like stolen appliances, wall holes, or scratch marks on the floors.

Tip #6: If You Don’t Ask, the Utility Expenses May Shock You

Always inquire about the average monthly utility expenses. Electricity, natural gas, and water consumption can vary with personal habits, but knowing what the current owner has been paying over the last year allows you to align your potential expenses before committing. If appliances like the furnace, air conditioner, or dishwasher are outdated and inefficient, you can use this to negotiate the price. You can always install things like water-saver shower heads and toilets later to save on some utility costs.

Internet, cable, and phone services are essential to most households, so it doesn’t hurt to ask the sellers if they’re happy with their current providers.

Tip #7: If it’s Not in Writing, Was it Ever Said?

You can’t always take the seller’s word on important things like:

• Repairs — why and when?
• Mould
• Remodelling
• If the basement ever flooded
• Old damage

Always get what the seller tells you in writing. You should also check with the city on zoning, permit history, and any restrictions that may apply to the property.

Tip #8: Always Change The Locks

The deal is finalized, and it’s time for the seller to turn over their keys. But wait, how can you be sure that all the keys to your property are in your hands? Family members, neighbours, cleaning companies, and even the dog walker may still have a key. Change every outdoor lock on the house, garage, and shed and change the garage code. New locks are well worth the peace of mind and sense of security.

Looking for a Seamless First-Time Home-Buying Experience?

Buying your first home can be complicated, but it doesn’t have to be. If you’re looking for a new home in Toronto or the GTA, be sure to partner with a realtor who knows the ins and out of real estate like the back of their hand. Joel Cooper walks you through the process step-by-step and answers all your questions to ensure your first-time (and every time) experience is a successful one.

Get in touch with Joel today.

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