How Not to Buy a First Home
NEW YORK (TheStreet) -- By the time you've bought and sold two or three homes, you'll be an old hand, savvy to most of the pitfalls. But that first home purchase can be a harsh learning experience. Missteps are easy.
What are the worst? A survey of first-time buyers in Canada provides some good examples - ones just as useful in the U.S. A full 60% of those surveyed in the annual RBC Home Ownership Poll say they made at least one mistake.
Among them,15% said they bought a home that needed too many renovations. Obviously, that means they faced budget-busting expenses or a lot of unwelcome toil.
About 14% said they made a down payment that was too small. That saddles an owner with monthly payments bigger than they had to be, straining the budget. And, if home prices do not rise quickly enough, it can make it harder to sell a home for enough to pay off the mortgage.
Third on the list was the 13% who did not have their home inspected. That opens the buyer to ugly surprises after moving in -- termite damage, mold or a failing water heater or furnace
Among the other mistakes cited were 11% who said they'd bought too quickly, 10% who hadn't planned for all the costs of homeownership and 8% who did not think about the space the family would need in the future.
Many first-time buyers are in their 20s, living on modest incomes and just thrilled to have a chance to own rather than rent. Tight budgets typically narrow their options. Aside from the mistakes already listed, beginners are subject to a number of others.
The home's appeal to future buyers is one of the most important. A discussion by HSH Associates, the mortgage-information firm, notes that a location is key. That means proximity to job opportunities, good schools, public transportation and other features future buyers would want.
Keep in mind that your potential buyers may be house hunting five, 10 or 20 years down the road. If your town depends on one or two big employers who could shut down or leave, your location's appeal could suddenly plummet. But if you have features that will last, such as waterfront or mountain views, your home's future value may be secure.