7 Common Edmonton Home Buyer Mistakes
When it comes to the home buying process, mistakes are inevitable. In fact, a poll of Canadian home buyers showed that 60% made an avoidable error while purchasing their home. Whether you’re a first-time homebuyer or a seasoned homeowner, there’s always something new you can learn to help you avoid those pitfalls.
No one wants to regret one of the most important purchases in their life. That’s why we’ve compiled a few of the most common Edmonton home buyer mistakes for you.
1. Picking the Wrong Neighbourhood
When you’re shopping for a new home, you might have a tendency to fall in love with a house that is unfortunately inconvenient for you. One study suggested that 35% of new home buyers were dissatisfied with the length of their commute. But, neighbourhoods offer more than just proximity to your job.
Be sure to research:
- Schools (if you have kids)
- Distance from restaurants, grocery stores, etc.
- Crime levels
Your neighbourhood should feel secure, have convenient amenities, and not be prohibitively far away from your place of employment.
2. Thinking You Have to Pay the Down Payment out of Pocket
One of the more common home buying mistakes to avoid in Edmonton is not researching other down payment options. The down payment may keep you from choosing the home of your dreams because you can’t quite afford 20% of the total asking price.
One way to bypass traditional down payment methods is through the Registered Retirement Savings Plan (RRSP) Home Buyer’s Plan (HBP). This effectively lets you borrow up to $25,000 from yourself. You do have to repay the loan within 15 years, but, in the short term, this allows you to possibly afford a down payment that might technically be out of your budget.
Other methods include provincial or municipal government programs, personal loans, lines of credit, credit cards, or simply paying less than the traditional 20%.
3. Trying to Find a Mortgage without a Mortgage Broker
As with most major purchases, it’s always a good idea to shop around. The easiest way to do that for a home loan is to contact a mortgage broker. Mortgage brokers provide the broadest range of mortgage possibilities because they have connections to a variety of different lenders.
Other benefits include:
- It’s almost always free because brokers are paid directly by lenders
- Brokers fill out a lot of the paperwork for you
- You can find the mortgage rate that suits you best
If you only shop for a mortgage at one bank, then you’re going to be stuck with whatever they have to offer. This could mean a higher interest rate that could’ve easily been avoided by going to a mortgage broker.
4. Overlooking Closing Costs
Although closing costs are required, they are certainly easy to overlook. Be sure to save some money to deal with these costs prior to moving in. Closing costs are usually anywhere from 1.5% to 4% of the purchase price.
These costs include:
- Realtor’s commission
- Land transfer tax
- Property tax
- Property insurance
- Hook-ups for utilities
- Legal fees
- Home inspections
- General moving costs
5. Choosing a Fixer-Upper for the Cheap Price
While certain common mistakes made by Edmonton home buyers are logistical, this one may be more of a calculating error. Fixer-uppers are nice in the short term because your wallet doesn’t initially take a hit. And it’s always possible that a fixer-upper is the right option for you.
Even so, you should always do a home inspection and calculate the final cost of all the renovations you’re going to have to do. Does the house have a rat infestation? Is the foundation deteriorating? How’s the roof? Is the piping outdated?
These are all questions you should ask yourself before you commit to a potentially rundown property. You may be gleefully anticipating adding value to your new home, but don’t underestimate how expensive renovations can be.
6. Making Big Purchases before Finalizing Mortgage Deal
Another common home buying mistake to avoid in Edmonton is making purchases prior to finalizing your mortgage rates. Adding another debt such as an automobile or spending an unnecessary amount of your savings can make significant changes to any mortgage deal you may have already hashed out.
If your lender sees these big purchases, they may, to your chagrin, alter the terms of the deal to protect themselves from risk. Make sure you focus on one big purchase at a time (in this case, your mortgage).
7. Buying a Home Based on its Staging
There’s no question that staged homes look nice. But, there’s a reason for that. Staging can change the minds of prospective homebuyers, but it shouldn’t always. A staged home is meant to optimize the appeal of any given home, even if the home itself isn’t that great. All staged homes are going to look nice, but not all of these homes are right for you.
Always keep in mind the following:
- Square footage (interior and exterior)
- Number of bedrooms
- Number of bathrooms
- Potential underlying problems (wood damage, roof damage, pests, etc.)
Always remember that an actual lived-in home is entirely different from a staged home. Be sure to know the difference when you’re house shopping.
There are plenty of common mistakes made by Edmonton home buyers, but the key is to minimize them.
What you should do now
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