So you’ve decided to live a simple life and want a small, minimal space of your own. That somewhere to call yours, away from your hoarder type family that’s been making you nuts with all their stuff while you rented a room from them.
Yay! It’s so exciting to have a place to call home that’s all yours. Where you can live the way you desire. Away from clutter.
You’re most likely doing this for the first time, or, if you’re like me, you may have been out of the market for a while and you’re a first time buyer all over again. Do overs are awesome. The super amazing part? In Canada, if you’ve been out of the housing market for five years or more, you get to be a first time home buyer all over again! I know, fun.
I can’t wait to own a small space of my own (again). But, knowing all the blunders I made the first time around, I want to be sure to avoid making the same mistakes twice.
Many of these painful blunders can be avoided simply by getting informed.
1. I wish I had put more than 5% down.
Way back in good old 2006, you were allowed to purchase a home with as little as zero down. Knowing what a huge mistake zero down would be, we opted to put 5% down which was all we could afford at the time. If we had done further research and had the patience to wait, we would have discovered that putting the full 20% down would have saved us a lot of money. The CMHC fees alone amounted to over $3000, plus taxes (an up front charge required to be paid for having less than 20% down).
If you can, do your best to save the full 20% down. I know its hard with house prices continuing to rise, but it will save you in the long run.
2. I wish I had scoped out the neighbourhood beforehand.
We bought a beautiful little starter home in a small town outside of Toronto. It was literally a few blocks away from where we were currently living. But to our surprise, even a few blocks can make a big difference in environment. Just because you may live in the same town to where you’re buying doesn’t mean things will be the same. You’ll have different neighbours after all.
If we had simply taken the time to walk around the area a bit more and mingle with a few of our potential neighbours, we could have saved ourselves some grief.
As we started to settle into our new home, we realized we were being “watched.” I know, creepy. House on the hill type stuff here. What we found out later from our other neighbours was that we had a quiet, nosy, busybody older couple living next door. They were aptly nicknamed “the neighbourhood watch.” Believe me, you didn’t want to cross these people. And we were living right next door!
It took about 6 months and my ex’s very loud car to finally incur their rath. The complaints started rolling in. They’d be at our door every time the car was too loud too early in the morning. They’d be at the door every time we had company over and had music a little too loud – at 9PM! They’d be peering out their front window watching our every move. It’s creepy when you’re sitting in your car to head to work with someone next door watching you. It quickly became our worst nightmare.
To top it all off, the train and gravel pit that we both knew of from living in town were ten times noisier in the home we had chosen. With each freight train and gravel pit blast, the entire house shook violently. Every glass in the kitchen would clang about.
Had I chatted up the neighbours, I would have known the issues from the beginning, and could have saved us some misery.
3. I wish I had shopped our mortgage rate more.
This is something that shouldn’t be neglected. Many of us believe that our banks have our best interests at heart – news flash – they don’t. They want your money and they want to make interest off you. The more debt you have the more they love you.
Shopping around for your mortgage rate could save you thousands in interest and take years off a 30 year mortgage sentence. (Did I say sentence? As in, jail time? Oops my bad). So why not take some time and consider all your options.
Sure, go to your bank and see what they’ll do. Then go to all the others. Then check out the credit unions. Then check out all the online rate comparison tools you can. These are those nifty tools designed to find you the best rate out of all the banks, brokers, agents and credit unions. It’s free and totally worth the time. Remember – 15 minutes could save thousands. (I sound like a Geico commercial.)
4. I wish we hadn’t used up all our cash to buy the house.
Your cash expenses when buying a home far exceed the down payment. There are closing costs, land transfer taxes, property taxes, insurances, home inspection fees, loan fees (if you have less than 20% down), legal fees, and many more.
The down payment and closing costs are your up front one time costs. After that, you’ll have ongoing costs for your utilities (hydro, water, etc.), insurances, taxes, moving fees…you get the idea.
Don’t forget that utilities may request a deposit of up to $500 each. Why? You may have no billing history with them and are considered a new customer.
It’s important to prepare for all of these and more ahead of time to avoid being left with a zero balance in your checking account.
5. I wish I had read every single first time homebuyers’ guide.
I mean it. Every. Single. Darn. One. I would have read them all and then read them all again. Buying a home for the first time puts you through the entire emotional spectrum. Excitement, frustration, happiness, chaos, confusion and stress. Oh, and anxiety.
The worst part? Getting part way through the whole transaction realizing you have to come up with an extra $3000 that between living expenses and car payments, you just don’t have. So you scramble to piece it together double time.
At the time, there weren’t many great resources for first timers. Er, maybe I should say, they weren’t easy to find. In most cases, the only tips and tools offered were from big banks or the government. Neither are a wonderful prospect to read. The bank guides extol all the wonderful virtues of buying a home and getting a mortgage from the bank. They rarely told you of all the expenses or pitfalls. Of course, right? They want all your money. Then there’s the government guides that are so technical, they’re basically non-english. It’s like reading an algebra textbook.
My advice? Find and read every first time homebuyers’ guide from every reputable source you can. And from every perspective – banks, government, mortgage brokers, rate comparison sites, bloggers (who have likely been first time homebuyers’), and more.
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