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Buying a house for the first time can be incredibly exciting, but because it’s the most expensive thing most people will ever buy, it can also be incredibly stressful. If you’ve done your due diligence, you’ll be well equipped to deal with everything the process throws at you. Here are 15 tips I advise every first-time homebuyer to keep in mind.
Scott McGillivray is a real estate expert and host of HGTV Canada's Income Property and Moving the McGillivrays.
Scott McGillivray is a real estate expert and host of HGTV Canada's Income Property and Moving the McGillivrays.
Real Estate
15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivray
October 30, 2017
Buying a house for the first time can be incredibly exciting, but because it’s the most expensive thing most people will ever buy, it can also be incredibly stressful. If you’ve done your due diligence, you’ll be well equipped to deal with everything the process throws at you. Here are 15 tips I advise every first-time homebuyer to keep in mind.
Scott McGillivray is a real estate expert and host of HGTV Canada's Income Property and Moving the McGillivrays.
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Determine Your Budget
1/15Determine Your Budget
1/15Photo Credit: Getty Images
Before you start house shopping, calculate your current living expenses to determine what kind of mortgage you can comfortably afford. Don’t forget to include things like transportation, phone, Internet and groceries. When you buy a house you need to have enough money to cover both your mortgage and your lifestyle.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayDetermine Your Budget
PHOTO 1 of 15READ LESS -Before you start house shopping, calculate your current living expenses to determine what kind of mortgage you can comfortably afford. Don’t forget to include things like transportation, phone, Internet and groceries. When you buy a house you need to have enough money to cover both your mortgage and your lifestyle.Photo Credit: Getty Images
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Determine Your Down Payment Early in the Process
2/15Determine Your Down Payment Early in the Process
2/15Photo Credit: Getty Images
If you’ve been planning for a while you should have a decent down payment saved. If not, figure out how much money you can access and how it will affect your monthly mortgage payments. Do this early in the process so that you can get a realistic idea of what you can afford.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayDetermine Your Down Payment Early in the Process
PHOTO 2 of 15READ LESS -If you’ve been planning for a while you should have a decent down payment saved. If not, figure out how much money you can access and how it will affect your monthly mortgage payments. Do this early in the process so that you can get a realistic idea of what you can afford.Photo Credit: Getty Images
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Don't Forget Closing Costs
3/15Don't Forget Closing Costs
3/15Photo Credit: Getty Images
Many first time homebuyers either forget, or don’t realize that they must pay closing costs when they purchase a property. While closing costs can vary, they’re often between 1.5 per cent and 3.5 per cent of the purchase price.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayDon't Forget Closing Costs
PHOTO 3 of 15READ LESS -Many first time homebuyers either forget, or don’t realize that they must pay closing costs when they purchase a property. While closing costs can vary, they’re often between 1.5 per cent and 3.5 per cent of the purchase price.Photo Credit: Getty Images
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Get Preapproved
4/15Get Preapproved
4/15Photo Credit: Getty Images
One of the smartest things you can do as a first time homebuyer is to get preapproved. Not only will it set the right expectations for what you can afford, but it might also give you an edge over the competition. When it comes time to make an offer, yours will not have to be conditional on financing.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayGet Preapproved
PHOTO 4 of 15READ LESS -One of the smartest things you can do as a first time homebuyer is to get preapproved. Not only will it set the right expectations for what you can afford, but it might also give you an edge over the competition. When it comes time to make an offer, yours will not have to be conditional on financing.Photo Credit: Getty Images
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Do a Practice Mortgage
5/15Do a Practice Mortgage
5/15Photo Credit: Getty Images
Once you decide you want to buy a home start putting aside the amount of a mortgage payment every month. After a year of doing this not only will you be more confident and comfortable with what you can pay, you’ll have an extra chunk of money to put towards your down payment.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayDo a Practice Mortgage
PHOTO 5 of 15READ LESS -Once you decide you want to buy a home start putting aside the amount of a mortgage payment every month. After a year of doing this not only will you be more confident and comfortable with what you can pay, you’ll have an extra chunk of money to put towards your down payment.Photo Credit: Getty Images
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Research the Market
6/15Research the Market
6/15Photo Credit: iStock Photo/Ingrid Hendriksen
Before you even consider buying, you should research the market so you can get a sense of what is available and what homes are selling for. While you might like to live in a certain neighbourhood, a little research will prove whether you can or can't afford a home in it. Keep an eye on what homes are selling for so that you have realistic expectations.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayResearch the Market
PHOTO 6 of 15READ LESS -Before you even consider buying, you should research the market so you can get a sense of what is available and what homes are selling for. While you might like to live in a certain neighbourhood, a little research will prove whether you can or can't afford a home in it. Keep an eye on what homes are selling for so that you have realistic expectations.Photo Credit: iStock Photo/Ingrid Hendriksen
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Make a Wish List
7/15Make a Wish List
7/15Photo Credit: Getty Images
When you start looking at properties, you should have an idea of what you want, ranking your top wish list items right down to the "nice to haves." Think about location, size, number of bedrooms, parking, exterior space, storage and so on. You may not get everything you want the first time out, but you need to start somewhere.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayMake a Wish List
PHOTO 7 of 15READ LESS -When you start looking at properties, you should have an idea of what you want, ranking your top wish list items right down to the "nice to haves." Think about location, size, number of bedrooms, parking, exterior space, storage and so on. You may not get everything you want the first time out, but you need to start somewhere.Photo Credit: Getty Images
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Don't Look at Houses You Can't Afford
8/15Don't Look at Houses You Can't Afford
8/15Photo Credit: Getty Images
Now that you know what you want and what you can afford, it’s up to you to make the two work together. DO NOT fall into the trap of looking at properties you can’t afford. When it comes to buying your first property you have to think with your head, not your heart, and falling in love with a house that’s out of reach will only result in disappointment.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayDon't Look at Houses You Can't Afford
PHOTO 8 of 15READ LESS -Now that you know what you want and what you can afford, it’s up to you to make the two work together. DO NOT fall into the trap of looking at properties you can’t afford. When it comes to buying your first property you have to think with your head, not your heart, and falling in love with a house that’s out of reach will only result in disappointment.Photo Credit: Getty Images
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Don't Get Emotional
9/15Don't Get Emotional
9/15Photo Credit: Getty Images
No matter what your situation, buying a house is always an emotional process. But it’s really important that you don’t let those emotions dictate your decisions. You have to fall in love with the numbers more than you fall in love with the house.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayDon't Get Emotional
PHOTO 9 of 15READ LESS -No matter what your situation, buying a house is always an emotional process. But it’s really important that you don’t let those emotions dictate your decisions. You have to fall in love with the numbers more than you fall in love with the house.Photo Credit: Getty Images
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Say "No" to Bidding Wars
10/15Say "No" to Bidding Wars
10/15Photo Credit: Getty Images
I always say that nobody wins a bidding war. You may get the house but if you’ve gone outside of your budget, you haven’t won anything. Even if the house seems perfect and you desperately want it, it’s not worth it. Another one – that won’t cause your budget to go up in smoke - will eventually come along.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivraySay "No" to Bidding Wars
PHOTO 10 of 15READ LESS -I always say that nobody wins a bidding war. You may get the house but if you’ve gone outside of your budget, you haven’t won anything. Even if the house seems perfect and you desperately want it, it’s not worth it. Another one – that won’t cause your budget to go up in smoke - will eventually come along.Photo Credit: Getty Images
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Get a Home Inspection
11/15Get a Home Inspection
11/15Photo Credit: Getty Images
In today’s market it’s not uncommon for people to forgo a home inspection in order to make their offer more appealing to the seller – particularly first time buyers who are eager to get into the market. I highly advise against this. You may get the house, but you may also get a lot of unexpected and very expensive problems with it. Don’t risk it. Get a home inspection. Period.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayGet a Home Inspection
PHOTO 11 of 15READ LESS -In today’s market it’s not uncommon for people to forgo a home inspection in order to make their offer more appealing to the seller – particularly first time buyers who are eager to get into the market. I highly advise against this. You may get the house, but you may also get a lot of unexpected and very expensive problems with it. Don’t risk it. Get a home inspection. Period.Photo Credit: Getty Images
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Accept That Your New Home Won't be Perfect
12/15Accept That Your New Home Won't be Perfect
12/15Photo Credit: Skit Inc.
While a home inspection will help you to identify certain issues, it’s important to remember that your first home might not be perfect. There may be issues you need to fix, or there may be things you have to sacrifice. Don’t let this discourage you. Stick with the things that really matter to you, and be willing to compromise on others.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayAccept That Your New Home Won't be Perfect
PHOTO 12 of 15READ LESS -While a home inspection will help you to identify certain issues, it’s important to remember that your first home might not be perfect. There may be issues you need to fix, or there may be things you have to sacrifice. Don’t let this discourage you. Stick with the things that really matter to you, and be willing to compromise on others.Photo Credit: Skit Inc.
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Set Aside an Emergency Fund
13/15Set Aside an Emergency Fund
13/15Photo Credit: Getty Images
No matter what kind of property you purchase – old or new, house or condo – there is always a chance something could go wrong. An appliance could break down, the roof could leak, or something else totally unexpected could happen. Make sure you’ve got an emergency fund to handle these issues. Remember, once you’re an owner and not a renter there’s no landlord to come to your rescue.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivraySet Aside an Emergency Fund
PHOTO 13 of 15READ LESS -No matter what kind of property you purchase – old or new, house or condo – there is always a chance something could go wrong. An appliance could break down, the roof could leak, or something else totally unexpected could happen. Make sure you’ve got an emergency fund to handle these issues. Remember, once you’re an owner and not a renter there’s no landlord to come to your rescue.Photo Credit: Getty Images
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Shop Early in the Week
14/15Shop Early in the Week
14/15Photo Credit: Getty Images
As a first time homebuyer, you might not be aware of some of the tricks of the trade. My favourite is to shop early in the week. Houses listed on a Monday or Tuesday typically sell for less than those listed on a Thursday or Friday. I always try to get in on a Wednesday so I can take a good look and put in an offer before the weekend traffic hits.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayShop Early in the Week
PHOTO 14 of 15READ LESS -As a first time homebuyer, you might not be aware of some of the tricks of the trade. My favourite is to shop early in the week. Houses listed on a Monday or Tuesday typically sell for less than those listed on a Thursday or Friday. I always try to get in on a Wednesday so I can take a good look and put in an offer before the weekend traffic hits.Photo Credit: Getty Images
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Consider the Perks of an Income Property
15/15Consider the Perks of an Income Property
15/15Photo Credit: Getty Images
Getting into the market can be expensive. One of the best ways to offset costs is to turn your home into an income property by either installing a secondary suite, or living with roommates. While these scenarios might not suit every first-time homebuyer, they are definitely worth considering for anyone who wants to get in the market but can’t make it work financially.Real Estate15 Money-Saving Tips for First-Time Homebuyers From Scott McGillivrayConsider the Perks of an Income Property
PHOTO 15 of 15READ LESS -Getting into the market can be expensive. One of the best ways to offset costs is to turn your home into an income property by either installing a secondary suite, or living with roommates. While these scenarios might not suit every first-time homebuyer, they are definitely worth considering for anyone who wants to get in the market but can’t make it work financially.Photo Credit: Getty Images
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