Common Mistakes People Make When Buying A Home
Fulfilling the dream of homeownership is an exciting time, but the reality of buying a home can be a daunting task. Purchasing a house involves one of the largest financial transactions you will ever make in your lifetime and not being prepared for what to expect can turn an exciting adventure into an overwhelming ordeal in no time.
Having a plan, knowing what to do, and how to go about it is vital to a successful and relatively stress-free home purchase. However, small mistakes, oversights, assumptions, and ignorance can cost you a lot.
At LifeLine Financial, I have over a decade of experience and know how the home buying process works. To share that knowledge with you and to help you avoid committing some costly errors that could lead you to lose out on buying your dream home, I have compiled a list of the most common mistakes people make when purchasing a home.
1. Assuming they will get a mortgage when it's time to close the deal. Most home-buyers, especially inexperienced first-time buyers get so excited that they mistakenly assume they will get a mortgage. They mistakenly believe that so long as they have saved enough for the down payment, they automatically qualify for a mortgage. To qualify for a mortgage, you require the right amount of downpayment, the right amount for closing costs, a more than good credit rating and the correct income. In today's Canada, you need more income than normal because of the stress test which requires a lender or mortgage broker to use a higher interest rate to qualify a buyer for a mortgage.
2. Assuming mortgage rates will remain the same from the date of approval to the closing date. Most lenders guarantee a mortgage rate for up to 120 days. Beyond that, the rate you were offered at the time of application is not guaranteed. Even for those who close within 120 days, many lenders do a last minute credit check to ensure your circumstances have not changed drastically. So, if after being approved for a mortgage, you miss a credit card payment, or you go and buy furniture on credit or you buy a car, you could end up getting a higher rate mortgage or even worse, being denied a mortgage, days before you close on your home purchase.
3. Assuming they will have a job at the time of closing. Those who buy new homes or homes under construction to be delivered a year or two before closing often face this problem. Buyers usually assume that their condition will remain the same. Unfortunately, in this economy, jobs are not guaranteed, and you could lose your job at any time. If you do and you do not quickly find a replacement job in the same industry, you could lose your house.
4. Relying solely only on a real estate agent while picking a home. Real estate agents, especially new ones, get so excited about finding a buyer that they forget to interview a potential client to ascertain how much they can conveniently afford. They just hop into their car with the buyer and go house-hunting. They want a big commission, so they talk the buyers into buying the nicer and more expensive homes. Of course, the newbie buyer is also excited and signs on the dotted line without thinking, only to find out much later that they've made a huge mistake.
5. Not consulting a mortgage expert or broker before making a selection. A mortgage expert must be on your list of professionals to consult while deciding on the type of house you want to purchase, the price range, and location. A mortgage professional will help you through preliminary mortgage qualifications so that you know exactly what price range you can afford and even tell you if you should buy a house or continue to rent for a while longer.
If you are in the market for a house, avoiding these and other mistakes could save you from a world of trouble. To learn how to steer clear of errors like these, consult LifeLine Financial. As a professional mortgage broker in Toronto, I will be happy to sit with you and review your situation before you start shopping for a home. Call me, Ken Ntiamoa at 4163981877, ext 201 or go to www.LifelineFinancial.ca to book an appointment.
I offer mortgage services along with debt consolidation, credit repair, bankruptcy advice to clients across North York, Scarborough, Mississauga, Brampton, Vaughan, Markham, and Toronto. With more than a decade of experience, I am the best choice to work with when it comes to finances and mortgages. For a complete list of services I offer, please click here. If you have any questions about mortgage finances, I’d love to hear from you. Please contact me here.