From DIANNE NICE
Globe and Mail Update
Published Sunday, Feb. 06, 2011 4:41PM EST
Last updated Monday, Feb. 07, 2011 7:18AM EST
When Chris Kiskuna bought her first house in 1985, she was so anxious to close the deal quickly, she skipped the home inspection – a decision she paid for the first time she turned on the tap in the bathroom sink.
“The water’s running and I’m hearing it run everywhere and thinking, ‘What’s happening here?’ And I look under the sink: no pipe.”
Ms. Kiskuna, says jumping into a deal is one of the most common mistakes first-time home buyers make. They fall in love with a property, worry about losing out, and throw caution to the wind or spend more than they should.
A house is one of the biggest investments most Canadians ever make, so it’s important to plan ahead, to think about what you need in a home and what you can afford.
Getting pre-approved for a mortgage is a great way to budget for a home and signal that you’re a serious buyer. However, keep in mind that the amount for which you are approved is the maximum amount the lender feels you can afford based on your income and projected property expenses. That figure doesn’t account for other expenses you may face, such as renovations or emergency home repair, as well as regular household costs.
“You know best ... what your costs are, so my advice would be look at what your paycheque is net, line up all those costs, including what you’re being told on the calculator is affordable for you, and see what is left at the end of the month,” Ms. Kiskuna says. “The last thing you want to do is hang yourself out to dry with [mortgage] payments that are simply too high to carry.”
Here are some other mistakes first-time buyers make, and how to avoid them:
Not knowing your credit score
A credit rating is a record of your credit history and current financial situation. A good credit rating can improve your ability to get loans, so if your score is low, you may want to work on improving it before you apply for a mortgage.
Not budgeting for the costs of home ownership