When the fine rhythmic American poet and thinker Vanilla Ice said “Stop, collaborate and listen” in his lyrical tour de force “Ice Ice Baby”, he probably wasn’t trying to impart any home buying wisdom. But the homeowners polled for RBC’s 20th Annual Home Ownership Poll definitely echo his sentiments, calling on rookie home buyers to stop, work with an advisor and consider the variables before they sign the final paperwork.
Home Buying Details Can Be Easy to Overlook
For a first time home buyer, it can be overwhelming to deal with the many steps of buying – and the majority admit to at least one misstep during the process – 60 per cent according to RBC’s poll.
From underestimating the significance of required property renovations to foregoing the home inspection, the veteran owners polled cautioned their newbie counterparts to cross their t’s and dot their i’s.
“Unfortunately we don’t get a ‘do-over’ when buying our first home, so it’s important to arm yourself with the right advice to avoid unexpected financial costs down the road,” says Rachel Wihby, strategy manager for First-Time Home Buyers at RBC. “Skipping a home inspection or rushing a home purchase are cautionary tales for prospective home buyers, especially younger and first time purchasers.”
The Top Buying Blunders
According to the survey, the biggest mistakes by first-timers include low balling significant renovations (15 per cent), making too small of a down payment (14 per cent), and skipping the home inspection (13 per cent). They also point to purchasing too quickly (11 per cent) and neglecting the hidden costs or total cost of home ownership (10 per cent) as rookie moves they made.
“Buying a home is typically the biggest financial decision that most people will ever make, so it’s important to plan ahead and keep emotions in check,” adds Wihby. “Seek expert advice every step of the way and leave some wiggle room in your budget for unexpected costs.”
Have You Really Saved Enough?
Down payments were a particular challenge for the younger generation of homeowners (ages 18-34) with 21 per cent saying they wish they’d have had a bigger down payment versus the national average of 14 per cent.
Younger first-time home owners also wish they’d have given more thought to future family space needs, with 13 per cent saying it was a concern.
Interestingly enough, some of the concerns addressed in the poll were cited as reasons that prospective homeowners haven’t made the leap yet.
Forty six per cent say they haven’t purchased because they can’t yet afford it while 32 per cent are saving for a large down payment.
Among these future buyers, 62 per cent expect their down payment will represent about 10 per cent of the home’s value with 53 per cent expecting it to take up to three years to save enough for the down payment.
Mortgage Focus Shifting From Fixed Rates
The poll also touched down on mortgages finding that 42 per cent of first time buyers were most interested in a combination/hybrid mortgage and were more likely to be looking for a mortgage that was longer than a five-year term.
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