Buying a home is a complex process, and there are plenty of opportunities to make a mistake. And when it comes to real estate, mistakes quickly add up to thousands of dollars or tens of thousands over the life of a loan. Here are some of the best kept secrets that many home buyers wish they knew the first time around. 

 Keep Money You Need Liquid  

If you are saving up for a down payment on a home, keep the money in a savings account. Don’t invest it, since the investment may go down in value and end up worth less than what you put in when you need to take it out.  

Another variation of this advice is to keep your emergency fund and sinking fund for home repairs in cash. Don’t pour money into your mortgage to pay it down only to turn around and pay fees to take out a home equity loan. You’re now paying more in interest and fees to tap into the home equity than you’d have paid if you just put several thousand dollars in a savings account and left it there until you needed it.  

And don’t try to generate a source of spending money by thinking new credit cards will take up the slack. Opening new credit cards before securing a mortgage hurts your credit and could result in a higher mortgage rate.  

Buy What You Need  

There are several ways this advice applies to a new home buyer. First, buy a home with the space you need, such as enough bedrooms for the kids you have and maybe one more if you’d like another child. Don’t buy a huge house in the hope you can use all of the space. Second, buy a home near the amenities you want and need, such as a home located near good schools and public transit hubs. Don’t spend more for a house in a more upscale neighborhood just because you want to be able to say you live there. Don’t spend more for a house with a third bathroom when two is probably fine for your family. Don’t fall in love with the swimming pool you’ll rarely use or luxury touches that result in a house that costs more than your budget. Always balance the thrill of potentially owning something with the maintenance tasks and costs it incurs.  

Loan Terms Matter as Much as Interest Rates  

One secret too many home buyers don’t learn until much later is how much the terms of the loan matter, and they may matter more than the interest rate itself. For example, an adjustable rate mortgage that adjusts upward becomes a major problem if there isn’t a cap on how high it can go. The low to moderate interest rate is mitigated by paying extra principle payments, but some loans limit how much you can pre-pay. A lower interest rate is nearly irrelevant if the loan comes with hefty fees.  

Talk to a Grande Prairie mortgage broker to find a loan that combines low interest rates with the loan terms you need.  

Get Pre-Approved for a Loan  

Too many home buyers don’t understand the difference between pre-qualification and pre-approval. Pre-qualification is the initial check of your credit report and finances followed by the bank saying, “We’ll probably give you a mortgage.” A pre-approval means they’ve already approved you for a mortgage up to a set amount at a given interest rate. If you’re only pre-qualified, you may not be able to secure a mortgage of the necessary amount to buy the home. And going through the loan approval process takes time that could kill a number of deals because the sellers go with the people who have been approved for a mortgage and can close faster.  

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