FAQ: Common First-Time Home Buying Mistakes

 

Continuing our look at common pitfalls that first-time home buyers make, let’s see what else you need to avoid to have a successful first-time home buying experience in today’s real estate market. Click to see the other pitfalls that await first-time buyers.

To ensure you avoid these mistakes, and the many other issues that can arise when buying a home, whether it’s your first or fifteenth, you need an experienced and understanding Realtor who is on your side. To talk to Steve about how he can help you find the home of your dreams, contact him today for a no-obligation interview.

Not Researching Down Payment Options

How much you pay for your down payment can impact your financial life for a long time. Do you need a high-ratio mortgage (less than 20% down)? Where will you get your mortgage insurance? Will you borrow from your RRSP? How will you collect your down payment? Have you saved enough? Do you require a gift? Issues of down payment tie very closely in with the next common home-buying mistake…

Not Knowing Your Credit Score

Do you know your credit score? Have you talked to a mortgage broker? If everything on your credit score is fine, then you will be able to move quickly in securing a mortgage but… if there’s an error on your credit score it can take a few months to straighten everything out – and you don’t want to lose a deal because you haven’t checked out your score in advance.

To check your credit scores, you can talk to a mortgage broker – and you should! – but to get started you can contact TransUnion and EquiFax and request your most recent credit report. You can buy them online, or make a written request to get them for free. An experienced mortgage broker can help you with this. Contact Steve and he’ll make sure you have the people and processes you need to have a successful real estate deal.

Not Researching Payment and Amortization Options

Most people pay their mortgage monthly. But you can save significant amounts of interest over the course of your mortgage by paying bi-weekly (every two weeks). Bi-weekly payments mean that, in one year, you’ll make 2 extra payments toward your mortgage. This can help pay down principal and reduce interest.

If you don’t want to make a couple of extra payments each year, perhaps the twice monthly payments fit better with your paycheque. You want your mortgage payments to fit your lifestyle and if you get paid twice per month, maybe it makes sense to pay your mortgage twice per month.

Another option is to make pre-payments on your principle. Many mortgages have pre-payment options which allow you to pay a little extra with each payment or once per calendar year. This can decrease the life of your mortgage significantly without undo pressure on your cashflow.

There are many online mortgage calculators that allow you to test out different scenarios. Make sure you use a Canadian site as interest on Canadian mortgages are calculated differently than American mortgages. Our interest is compounded semi-annually.

Choose Your Real Estate Agent Carefully – Experience Matters

Working with an experienced mortgage broker, and an experienced real estate agent will help you to navigate all the possibilities and potential pitfalls of the Canadian real estate world. To talk to Steve about how he can help you when you are buying your first home, contact him today for a no-obligation interview.

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