So you've decided to buy your very first home. That's an amazing achievement and a
very exciting time in your life. Today I'm gonna tell you the most common errors
that First Time Home Buyers make, and by the end of this video you'll be able
to fully prepare yourself to avoid these costly mistakes so you'll have the best
home buying experience possible. I've helped countless First Time Home Buyers
successfully navigate through these unchartered waters, and by helping them
to prepare properly and avoid these mistakes, they can focus on the fun parts
like viewing the homes, winning the offer, and ultimately the feeling of pride and
joy they get when they're handed the keys to their very first home. And if
it's your first time here make sure you hit that subscribe button and
notification bell because you don't want to miss out on Part 2 of this video, and
also we're constantly coming up with more valuable Real Estate and Mortgage
Tips and Tricks for you guys. So let's get started! Error number one is not
getting a pre-approval for mortgage before you start looking at homes. Trust
me I get it, you're super excited right now and you want to get in homes right
away, but make sure you don't skip this important step because you might be
setting yourself up for possible disappointment. For example, you fall in
love with a $500,000 single-family home, but when you go and get your approval
afterwards, you find out you're only qualified for
$400,000 and you have to give up that property, and that's super
heartbreaking. On the other side maybe you thought you're only qualified for
$300,000 and you settle a bit on the property that you buy, and then later
when you go and get qualified afterwards, you find out you could have qualified for
$400,000 and could have bought the home that you really loved with all the
upgrades that you're looking for. There are a ton of mortgage calculators out
there and information on internet, but it does not replace the need to get a
pre-approval. Because lenders are the ones that decide what you're qualified
for and it's not within your control, why not take the guesswork out of the
equation? Getting a pre-approval first definitely has its benefits.
Number one, you can go out there and shop with confidence because now you have a
pre-approval that helps you to determine what type of property you buy and in
which community. Secondly, it protects you from rising interest rates. For
example, usually you can lock in the rate up to 120 days. But if rates go up during
that period of time, then you're gonna get the lower rate that you're locked in
at. And if rates go down during that period of time, then you'll get the
benefit of the lower rate. Now this is very, very important. A pre-approval is
not a final approval. So make sure during that time you don't purchase anything on
your current credit or open any new lines of credit or credit accounts,
because that could jeopardize your final approval and it could mean the
difference between buying the home that you love or missing out on it. For a
recommendation to one of the best mortgage brokers that I know in Alberta,
just let me know. He may be small in stature but he has a HUGE heart! Felix is
great because he's truly invested in his clients and he works with them earlier
on the process so that if there's anything that needs to be improved to
unlock the better approvals that you'll get, he will definitely give you the
advice for that. the second error that I see First Time Home Buyers make is not
understanding their WHY. So you've probably already started a checklist of
what you're looking for in a home, and let's just say you put there: three bedrooms,
double garage, and finished basement. Now what I'm talking about is, I call this
the Vision Exercise because if we can link WHAT we're looking for with WHY,
then we can gain the clarity that we need to be able to rank them by
importance. And when we go through homes, we can actually envision how each home
is going to enhance your lifestyle not only today, but also for years to come. So
let's do a quick example so that you know how to get to your WHYs and also
how to use the Vision Exercise to help you. Let's take John and Stacey, they're a
couple and they want to buy a home that they can eventually have a family in. So
they've written onto their list their WHATs, and they have, three bedrooms, a
double garage, and a finished basement. So how do we link those two are WHYs? We'll
take the three bedrooms. and they've discussed before that they want to
eventually have two children so that's the reason that they have three bedrooms
written down there, but we don't have to stop there. We can actually dive a bit
deeper to understand that they've discussed before that they want to have
the children pretty similar in age. So maybe it's more ideal for them to
have all three bedrooms actually on the same floor, so that it's easier for John
and Stacey to take care of the kids and one of them does not need to live in the
basement. So now the three bedrooms which, was what we started with, has become
three bedrooms on the same floor. Now that's the proper vision because WHAT
we're looking for is actually linked highly with WHY, and now we're gonna rank
it and that one ranks pretty high, because John and Stacey really want to
have the two children in the future. So we're gonna put that as rank one. The
second item they have on their list is having a double garage and they've put
that there originally because right now they are both driving separately to get
to work. But they actually discussed it, and thought that if they found the right
home in the right location and John had access to public transit, for example,
then it might be okay just to have the one car, which would actually save on
cost and they would have to pay less gas, less insurance, and less for a car
payment. And now maybe a single garage makes sense so we're gonna change that
item from double garage to single garage or bigger and we're gonna rank that one
pretty high up and it's gonna be second in position, because either way they do
want to have a garage. The third item on their list is a finished basement and
John and Stacey have discussed why they need this finished basement and they
decided that it's really for their children to have an extra playroom.
Because they don't have these children yet, they don't necessarily need
a finished basement right now, so we're actually going to change this item from
finished basement to an unfinished basement or finished basement. That
way it opens up many more homes that they can look at that might be a great
fit right now, and they can choose to develop a basement later. So now John and
Stacey are ready to choose the home that fits most their criteria that ranked
higher on their list, because I'm gonna bust a huge myth here: The perfect home
does not exist. However, if you know your WHY and also have clarity and what your
vision looks like, you'll be able to come very, very close. It's
important to note that this Vision Exercise is ever-evolving, and don't be
surprised when things change on that list or ranked differently. And if you
have a partner, I recommend that you do it separately first, because everyone
has a different vision, and then sit together and discuss, decide, and rank
those items together. If you still need more help I've included my free Vision
Exercise template in a download link below in the description. The third error
I see First Time Home Buyers make is not knowing all the costs beforehand and
these are things like your lawyer fees, your home inspection, your appraisal, your
title insurance, and your downpayment. Now Felix already has a great video out
there that goes over the ten costs of buying a home in detail, you can check
that out here also I'll leave a link in the description below. Of course owning a
home is not like renting or living at your parents' place, I've seen clients not
account for all the costs that come with buying a home, but not only that it's
when they live in there already, there's also extra monthly expense. So
one of those things is maintenance costs. You want to make sure that you save
about one percent of your purchase price for maintenance costs per year, so for
example, if you bought a $500,000 house you want to make
sure that you have $5,000 saved in your account just in case you need to
fix anything or maintain your property. Then there's utility costs and it takes
only a little bit of research and calling around in your city to
understand what you should be budgeting for this. Just a rule of thumb that you
can follow is: the more people that you're going to be living with, or the
home is going to be bigger, typically your utility costs will be
higher. Also there's property tax and in Canada
you can usually pay this one of two ways number, one is lump sum at the end of the
year or number two, is monthly through the TIPP program. I always recommend
my clients to go through the TIPP program and pay monthly because it's a little
bit easier to budget for that, and you're not going to be stuck with a large
property tax bill at the end of the year that maybe you forgot about or didn't
account for. The great thing about the TIPP
program is there is no fee or interest charged to pay monthly. And the last thing
is home insurance, which is key to protecting your investment. Not only is
it going to protect your belongings but also from things like natural disasters.
The great thing is you can call around a few different insurance
companies to get different quotes so that you can budget properly. Let's
give you an example: your family has been dreaming of living across from the
river you'll have beautiful views there and you're gonna be able to walk along
the river - and that's a great vision! But did you consider and budget for the higher
insurance premiums that you will have, because you'll be living in the floodway?
That's definitely something to consider. So budgeting is everything, and if you're
fully prepared to know exactly what your costs are then there won't be any
surprises. Because who wants to be house poor anyways? Make sure you do your
due diligence and be fully prepared so that you can avoid making these mistakes
as a First Time Home Buyer. And stay tuned for Part 2 because I'll be releasing
that soon. If you found this video valuable, please hit that like button and
share with anybody you think that could benefit from this video. Also, if you
want to share with us what your experience was as a First Time Home Buyer
or any other mistakes you have come across, or you have any questions, leave
that in the comment section below. Please subscribe to our channel as we're gonna
come up with more Real Estate and Mortgage tips for you. My name is Jasben
Lai with the LiveInnerCity Real Estate Team, always happy to bring you value and
helping you keep real estate simple. We'll see you next time