Waterloo Region homebuyers who are making their first purchase have a lot riding on their success. After all, it's likely to be one of the most expensive purchases they'll ever make.
Key architectural components, such as granite countertops and open floor plans, are frequently dreamt about by potential buyers, but the reality of what they can afford may be quite different.
Similarly, there may be a disconnect between what a buyer wants now and what they will want or need in the future—for example, when they start or grow their family and don't have enough space.
Because of these inconsistencies, many first-time homebuyers may make the wrong decision. They prioritize layout over pricing, or they make a purchasing decision based on their gut instinct rather than a thorough examination of their lifestyle and finances.
These blunders can be avoided by first-time homebuyers who are willing to approach the process pragmatically rather than emotionally. Sure, granite countertops are nice, but so are affordable mortgage payments and a manageable commute to work. And actually being able to eat.
Consider these five questions to ask yourself while looking for a starting house as part of determining how much home you can afford.
Important Points to Remember
When it comes to purchasing a first home, it's critical not to let emotional concerns take precedence over practical considerations.
Choose a property that you can afford and stay in for at least the five to seven years it may take to recoup your costs and see a profit.
Consider your current lifestyle as well as your future plans, especially if you are thinking about starting a family.
In preparation for the day when you are ready to move on, make sure the house has been well-maintained and has resale value.
Is This a House You Can Afford?
Most first-time buyers are sensible enough to get preapproved for a mortgage before looking for a starting home. They then shop based on the maximum amount they can borrow. After all, why not opt for the home at the top of the budget if the bank or mortgage firm indicated they qualified for a certain amount? However, just because you qualify for that 2,500-square-foot home on a one-acre lot doesn't mean you should buy it.
This may result in major financial issues, leaving you unable to pay your mortgage on a monthly basis. If you spend all of your money on home maintenance, it might rapidly become a cause of stress rather than joy. What matters more than your qualifications is what you can actually afford.
You want to buy a home you can afford, since most experts recommend staying in your new home for five to seven years to recoup your costs and get a return on your investment.
Rather than going all-in on your first house, it's a better idea to look for a more reasonable starter home that won't break the bank and provides room in your budget for entertainment and other unanticipated life expenses.
Is It a Good Fit for Your Lifestyle?
First-time buyers frequently make the mistake of focusing on what they want inside the house rather than other considerations such as proximity to friends, family, shopping, and job. As a result, you may be enticed to buy a home because it is move-in ready, or because it has a pool in the backyard, or because it satisfies all of your buying criteria in terms of physical 'stuff' it includes.
However, as a first-time buyer, you should think about more than just the floor plan and amenities. You must ensure that the home suits your lifestyle and the things that are important to you and your family (if you have one yet), such as a short commute to work or proximity to extended family.
The last thing you want to do is buy a house that is too far away from everything that matters to you. Not only will it increase your expenses if you spend more money and time commuting, but it will also cost you emotionally if you are stressed out from daily traffic or don't see your friends and family as frequently as you'd want. Make a list of these kinds of lifestyle priorities and consider them before making a purchase.
You also need to avoid becoming "house-poor" by taking on a big mortgage that leaves you with little money for other expenses such as utilities, vacations, entertainment, or even food after making your monthly mortgage payment.
What do you think your future self will want?
The majority of people who buy a starter house don't think about their lives five or ten years down the road. However, failing to look into the future might be an expensive mistake.
Take, for example, your aspirations to start a family. You and your partner may not be planning to start a family in the next year, but it's something you might think about in the nearish future. If you don't think about it now, you can end up buying a starter home that won't accommodate a growing family or is unsuitable for little children.
Let's imagine you're a single person trying to buy your first house. When you're dating, buying in the heart of a city with plenty of nightlife may be excellent, but once you've settled down, you may prefer a quieter location.
While it's difficult to see into the future while living in the present, thinking about your long-term goals and attempting to include them into your purchasing decision might help you make a decision that will benefit you both now and in the future.
Has the property been well-kept?
Television shows make it appear that doing various home improvements is simple, but this is far from the case. Just because you're buying a starter house doesn't necessarily mean you should go for a fixer-upper that requires a lot of modifications and renovations.
First-time buyers should look for a home that has been well-maintained and does not require extensive repairs or upkeep. Even normal home maintenance, let alone repairs and upgrading, is pricey. If extensive repairs or replacements are required, it may be preferable to shift your search to finding a more well-maintained property.
Do you have an exit strategy?
Because starter houses aren't meant to be kept forever, you'll want to choose one that has the potential to make you money when the time comes to sell.
That means you'll want to have an exit strategy in place for the property you're buying, whether it's selecting a home that will be easy to rent in the future or one in a desirable neighborhood or school district that can be quickly sold. When you're ready to move on, the last thing you want is to be trapped with the property.
Final Thoughts
Homeownership can be liberating, but it can also be intimidating, particularly for first-time buyers. On the road to homeownership, mistakes abound, but many may be avoided. Begin by selecting a beginning house that is well within your budget and satisfies your present and future wants and needs, while also considering an exit strategy.
Working with a great real estate agent who not only knows the area but is used to working with first time homebuyers will make a huge difference in how well your first time home hunt goes as well.
An experienced agent can not only help you find a great Waterloo Region home, they can also answer all your questions, calm your nerves and get you through all the new stuff you'll be facing, from obtaining the right mortgage to winning a bid and getting through all the paperwork leading up to the closing day.
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f you’re in search of that dream Waterloo Region home, contact Team Pinto. Let us use our huge local real estate experience and expertise to help you. Contact us directly here, or book a free Zoom consultation to discuss your unique Waterloo Region real estate needs at a time that's most convenient for you.