This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

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.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs