Buying a home is one of the most exciting life experiences we go through—especially for first time buyers. That said, it is also one of the decisions we make that will have the most impact on our lives, so it is critical that adequate thought and consideration go into discerning what the right purchase may be. Your home will likely be the single greatest expense in your life—not just in its actual cost, but in additional costs such as insurance and maintenance. This is not to say that home purchasing ought to be somber and joyless, but rather, to caution you against purchasing mistakes that will have adverse effects on you and your family in the long term. These mistakes include:
Overpaying for a home. It's key here to remember that your home serves two primary functions: it is a dwelling place, but it is also an investment. While you'll want to have a checklist of criteria that that make your dream home, and while you'll want to match that list as closely as possible, be sure that your attachment to the criteria don't distract you from the actual value of the property itself. Speaking with a real estate agent about the various factors that contribute to the final value of a home can help you to better assess whether the asking price is a reasonable one. Additionally, multiple listings in the same area offer a great opportunity for the kind of comparison you want to do: if two (or more) houses in the same neighbourhood are roughly matched in size and finish, and one of them is significantly pricier than the other, this could be a red flag.
Buying beyond your means. One of the worst mistakes you can make with the purchase of a new home is to buy beyond what you can afford. Unfortunately, some agents may facilitate that by deliberately showing you homes that are “slightly” beyond the range you initially told them you were interested in. If this happens, you need to be firm—avoid the temptation altogether to ensure that you approach this with financial responsibility. To really determine what you are willing to spend on a home, consider the monthly payments you would be making with a potential home, and compare them to what you are currently paying (either in rent or mortgage). There will likely be at least some difference; the trick here is assessing whether it's a difference you can manage. Where will that additional $200 a month come from? Be sure to write these things down—otherwise, you may be making promises of frugality to yourself that you just aren't going to keep.
Buying in the wrong spot. Remember that this is a decision you will be living with daily—the where definitely matters. Certainly, the neighbourhoods that you can purchase in are largely going to be determined by what you can afford. For example, a Calgary homebuyer wouldn't expect to buy a a four bedroom house in Mount Royal for $100 000. That said, whatever your budget, there will be choices for you to make around location. For example, you may be faced with the decision of whether to buy small in order to be closer to the heart of the city, or whether to live in the suburbs where the same money will get you more space. Will the extra space be worth the longer commute you'll need to make? Do you want to purchase that house right behind the hospital where you're bound to hear sirens all day long? Or do you want to find something similar in the same neighborhood that's only a couple of blocks away from that? And so forth.