5 Things to Avoid as a First Time Homebuyer

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September 28, 2021

Purchasing a home can be a complex and daunting process, especially for first time homebuyers. With so many tasks to complete and considerations to keep in mind, it can be easy to make a mistake. As leading providers of mortgage financing and lending solutions, the team at PHL Capital understands how complicated the home buying process can be. That is why we have provided a list of 5 things to avoid as a first time homebuyer to help you make an informed decision. This will ensure that you are purchasing a home you love without stretching your finances to the limit.

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Common Mistakes for First Time Homebuyers

To ensure that you are getting the perfect property for your needs and budget, it is important to know how to avoid common mistakes. The following list outlines 5 common mistakes made by first time homebuyers:

1. Maxing Out Your Budget

Many first time homebuyers will look for the most expensive home they can afford, maxing out their budget at the start of the process. Be sure to prioritize your needs over your wants, as this can help to ensure that your home falls well under your max budget, giving you additional finances for emergencies and vacations. In general, your monthly mortgage payments should not be greater than 30% of your monthly income.

2. Confusing Prequalification and Preapproval

When mortgage lenders prequalify or preapprove you for a mortgage, they provide an estimate of what they may lend you. While prequalification can give you an idea of what your price range should be, it does not guarantee that you will get a loan of that amount. Preapproval is a more concrete commitment from a lender as it is conditioned on your ability to pay back the loan over time.

3. Not Performing a Home Inspection

Though home inspections are an extra expense, they are extremely important. While a home may look perfect during your initial viewing/walkthrough, there could be a variety of problems under the surface. A certified inspector can find these issues, allowing you to negotiate with the current owner to perform repairs or adjust their price accordingly before removing subjects on your offer.

4. Forgetting About Closing Costs

In addition to the down payment, there are several closing costs—notary fees, title insurance, etc.—that must be accounted for. These can be equal to 3-5% of the total purchase price, so be sure to factor these into your budget.

5. Overlooking the Additional Costs of Ownership

In addition to your mortgage, you will likely need to budget for property taxes, insurance costs, and maintenance costs. For condos and townhomes, you will also need to budget for monthly strata fees. These fees should be known and accounted for before you remove subjects on your offer.

To learn more first time home buying tips or to inquire about our lending guidelines, get in touch with the experts at PHL Capital. We can be reached at 604-579-0849 or through our online contact form and will be happy to answer any questions you may have.