Information and Advise


Top 10 Myths That Trip Up First-Time Home Buyers

Cindi French

If you’re thinking about buying a home, you’ve probably received your share of advice from family and friends. Add to that the constant stream of TV shows, news segments, and social media posts that over-simplify the home buying process for easy entertainment.

 

With so much information to sift through, it can be tough to distinguish fact from fiction. That’s why we’re revealing the truth behind some of the most common home buyer myths and misconceptions. 

 

Buying a home is a big decision, but it doesn’t have to be a scary one. If you arm yourself with knowledge and a qualified team of support professionals, you’ll be well equipped to make the right choices for your family and financial future.

 

 

DON’T FALL FOR THESE COMMON HOME BUYER MYTHS

 

Myth #1: You need a 20% down payment. 

Plenty of buyers are purchasing homes with down payments that are much less than 20% of the total cost of the property. Today, you can buy a home with as little as 5% down.

 

There are multiple programs out there that allow you to have a lower down payment, and a lender or mortgage broker can talk you through which option is the best for you. Since you’re putting less money down, you’re a riskier borrower to your lender than people who put down a full 20%. Because of this, you will most likely need to pay mortgage insurance as part of your monthly payment.

 

Myth #2: Real estate agents are expensive. 

Your agent is with you every step of the way throughout your home buying journey, and he or she spends countless hours working on your behalf. It sounds like having an agent is expensive, right? Well, not for you. Buyers usually don’t pay a real estate agent’s commission. Your agent’s fee is paid for at closing by the seller of the home you’re buying.

 

Myth #3: Don’t call a real estate agent until you're ready to buy. 

The earlier you bring in an agent to help with the purchasing process, the better. Even if you’re in the very early stages of casually browsingRealtor.ca, a real estate professional can be a huge help. 

 

They can create a search for you in the Multiple Listing Service (MLS), so you get notifications for every house that meets your criteria as soon as it hits the market. The MLS is typically more up-to-date than popular home search sites like Realtor.ca. Setting up a search a few months before you’re considering buying gives you a good idea of what’s out there in your town that’s in your budget. Reviewing the MLS and speaking with an agent as soon as possible can help you set realistic expectations for when you actually start the house hunting process. 


Myth #4: Fixer-uppers are more budget friendly. 

We’ve all watched the shows on HGTV that encourage people to go after fixer-uppers because they’re more affordable and allow buyers to eventually renovate the home to include everything on their wishlist. But, this isn’t always the case. 

 

Sometimes, homes that need a lot of work also require a lot of money. Big renovations, like add-ons, a total kitchen remodel, or installing a pool, take a lot longer than it looks on TV. If you’re really interested in a fixer-upper, ask your agent to show you a mix of newer homes and older homes. If you fall in love with an older home that needs a lot of work, get some quotes from contractors before you buy so you know the real cost of the renovations and see if you can work them into your budget. 

 

Myth #5: Your only upfront cost is your down payment. 

Your down payment is big, but it isn’t the only money you’ll spend during the home buying process. At closing, you’ll pay your down payment, but you’ll also bring closing costs to the table. Closing costs are typically anywhere from 2-4% of the total purchase price of the home.2 This amount includes the cost for items like homeowners insurance, title fees, and more.

 

 

Myth #6: You need a high credit score to buy a house. 

You don’t need perfect credit to buy the perfect home. There are loans out there that buyers with lower credit scores can qualify for. These are good options for people who have had credit issues in the past, but some of them come with additional fees you will need to pay. Speak to a few local lenders or mortgage brokers to talk through which options might be best for you. 


Myth #7: You can't qualify for a mortgage if you're still paying off student loans.

While some buyers may feel more comfortable paying off their existing debts before taking the leap into homeownership, it’s not a requirement. When you’re applying for a mortgage, the lender takes a close look at your debt-to-income ratio.3 If you want to calculate this on your own, add up all of your monthly debt payments and divide those by your monthly income. When you’re lender does this, they’re trying to make sure that you will be able to afford your monthly mortgage payments along with your other existing payments. If your income is high enough to allow you to make all of these payments each month, having a student loan will most likely not stop you from getting a mortgage. 

 

Myth #8: You should base your budget on what your lender approves.

How much house you qualify for and how much you can afford are two totally different numbers. When you prequalify for a mortgage, your lender will look at your income, debt, assets, credit score, and financial history to determine how much money you might qualify for.4 For some people, this number might be much higher than you thought because lenders tend to approve for the highest amount they think you can afford. But that doesn’t mean that’s how much you should borrow. 

 

Instead, figure out how much house you can actually afford. An online mortgage calculator can be a good first step in determining this number. We recommend thinking about what you want your monthly payment to be as a starting point. And remember to include your principal, interest, taxes, and, insurance. You should also think about ownership expenses that aren’t part of your monthly payment, like updates and maintenance.


Myth #9: It's all about location. 

You’ve heard the phrase. Location, location, location is basically the real estate industry’s motto, but we’ll let you in on a little known secret: It’s not always true. Yes, location is great to consider when it comes to school districts and commute times, but you also need to think about how the home will function for you and/or your family’s lifestyle. If a family of five is choosing between a one bedroom condo in the bustling city center and a 4-bedroom home out in the suburbs, the latter is probably the best, most functional choice for them. Also, by buying in a less sought after neighborhood, your property taxes will most likely be much lower! 

 

Obviously, you might still want to choose an area with great resale potential, and this is something that your agent can speak to you about. They’re an expert in your city and are constantly monitoring buying and selling trends. 

 

Myth #10: If you look hard enough, you'll find a home that checks every box on your wishlist

You’ve seen that famous house hunting show. And while we have our suspicions about how real it is, the one thing they get right is that almost every buyer needs to compromise on something. Yes, the perfect house that meets every item on your wishlist is probably out there, but it’s also probably double or triple your budget. 

 

A long wishlist can be a great starting point for figuring out what you want and don’t want, but we recommend narrowing that wishlist down to the top five things that are important to you in order of priority. We also recommend noting on your wishlist what your absolute deal breakers are, like “must have a yard for our dog,” and noting what you can live without, like “heated bathroom floors.” 

 

This is a great list to discuss when you first start talking to an agent. A good real estate agent will be able to look at your list and find properties that might work for you. By coming to that first meeting with realistic expectations and knowledge about home buying rather than a bunch of myths heard here and there, you’ll be able to start the process off on the right foot and be in your new house in no time. 

 

 

WE’RE HERE TO HELP

 

Whether you’re a first-time buyer or a seasoned homeowner, there’s no reason to go through the home buying process without an advocate on your side. We’re here to answer your questions and do the hard work for you, so you can spend your time dreaming about your new home. Call us today to schedule a free, no-obligation consultation.

 

Get a FREE copy of our Home Buyer’s Guide to Getting Mortgage Ready

 

Now that we’ve cleared up these common homebuyer myths, find out if you know the steps you should take to prepare financially before you apply for a mortgage. Contact us to request a complimentary copy of our “Home Buyer’s Guide to Getting Mortgage Ready.” 

 
 

Top Five Points to Remember When Picking New Kitchen Cabinets

The kitchen is a common room for all members of the family. It gets lots of traffic in a single day, explaining why it can start to show signs of deterioration in just a few years.  Your kitchen deserves a makeover and this can entail a fresh layer of paint or brand new appliances. The kitchen is likely to brighten up if you buy new cabinets. According to expert kitchen designers, you should always reflect on the following five points prior to making a decision on either picking custom cabinets or pre-manufactured designer cabinets. They include:

 

1)       Price

 

Custom cabinets are usually pricier than pre-fabricated cabinets. However, you can buy slightly cheaper custom cupboards from a big box store and have them installed for a fee. If you decide to buy custom-made cabinets from a carpentry shop, however, you will most likely pay a hefty price for your cabinet based on the materials you opt for, your kitchen size and your neighbourhood. It may be easier to just choose designer cabinets because they come in a wide range and are customizable. 

 

2)        Removal of old cabinets and installation of new ones

 

Whether you purchase your new kitchen cabinets from cabinet carpenters or box stores, there will be nice services to enjoy from each. Many stores include removal and installation service in their fee. It means that the service provider will remove your old and worn-out cupboards, install your new ones and clean your kitchen after finishing their work.  If your service provider does not provide this service you will have to budget for it as well.

 

3)       Size of your kitchen

 

Does your kitchen have an odd shape? If so, it could be that no other cabinets would be more appropriate for your kitchen size and shape than made-to-measure styles.  On the other hand, you may have a basic kitchen design that can support both pre-fabricated cabinets and box-store ones. If that is the case you can choose either of the two as they are the cheaper alternatives.

 

4)       Value for your money

 

According to professional kitchen designers who make custom cabinets in the GTA (Greater Toronto Area), you can get more value for your money if you use a custom cabinet maker.  Not only does a custom designer give you an option to choose furniture that will suit the size, shape and design of your kitchen. They also possess quality craftsmanship that you can hardly find from the makers of pre-fabricated kitchen cupboards.

 

5)       Customer support

 

A custom cabinet maker provides quick customer service particularly when there is an issue with your order. In addition, their responsiveness when quick repair projects crop up usually doubles that of a huge manufacturer.  Furthermore, custom cabinet makers tend to outdo pre-fabricated cabinet manufacturers even when it comes to owning up to their own faults. They respond quickly and practically to the needs of their customers.

 

Final tip

 

Any remodelling project is a big undertaking for a homeowner like you. Therefore you need to create your budget carefully, being fully aware and honest about your needs, and then seek assistance from a renowned home professional in your local area.