Top Five Home Buying Errors to Avoid

Posted: December 16, 2011 in Buyers, General Information, Mortgages
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As housing market increases, homebuyers need to be informed about costly oversights.

Affordability and availability being on the rise in the homes for sale could spell trouble for many potential buyers. Here are some common errors to avoid when purchasing a home:

1. Not knowing what you can afford
There is an easy way to calculate how much house you can afford. Used by Realtors, this calculation called the Gross Debt Service Ratio will help you figure out how much home you can afford and help you avoid making costly mistakes in a competitive environment that could restrict your  lifestyle choices.

In addition to the cost of the home, potential buyers should consider the land transfer tax, closing costs, moving costs and leave room for any unforeseen extras.

2. Not preparing your finances, or getting pre-approved
Many sellers require a potential buyer to get pre-approved. When there are competing bids on the house of your dreams, pre-approval could give you the edge in the negotiations. Pre-approval can take up to a few days after you provide your bank with things like verification of income and down payment.

If a buyer meets the lender’s requirements, then written confirmation of pre-approval will be provided. According to the Canada Mortgage and Housing Corporation, this pre-approval is time sensitive and is not a guarantee of receiving a mortgage loan.

A caution to  buyers though is to avoid using the pre-approval as a final budget. You should balance your debt load and other financial commitments with what the bank is willing to lend.

3. Not knowing your must-haves
Sometimes you just aren’t sure about what you’re looking for. Do not fail to consider what amenities are in the neighbourhood that you’re looking to buy into, especially when relocating from the city to the suburbs. How ‘walkable‘ is a neighbourhood to places like grocery stores, schools and banks? This feature should be important to most homebuyers, but we often fail to think about it in the excitement about the number of bathrooms a house has. Create a list by thinking about a day in your life and the various things important to you and your family.

4. Not getting a home inspection 
Buyers are highly advised to have a full home inspection done by a qualified and bonded home inspector and to make it part of the offer. And this even if the seller offers a previously done inspection. The few hundred dollars spent could save you thousands down the road. 

5. Getting emotions involved in negotiations
Buyers and sellers will often let their emotions get the best of them and that can get in the way of negotiations. The sellers might inadvertently assess value to their memories, which don’t hold financial value for the buyer. The Realtor’s role often will be to help the buyer keep their emotion out of the equation.

If you are looking to buy a home hire a Realtor with the proven  negotiation skills and expertise.
Seller or Buyer…Call Dale Dyer.

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