Common Mistake : Buying a Money Pit

There’s a Tom Hanks movie called The Money Pit. In that film, Hanks bought a house that nearly bankrupted him because it needed so many repairs. The exaggerated lesson from that movie is that after buying a house, you may spend thousands of dollars on repairs. And unless you’re handy, you really shouldn’t buy a fixer-upper.

Watch out for serious house-related problems such as a:

• Leaky roof
• Water in the basement
• Mold
• Bad plumbing
• Lead-based paint
• Radon, a colorless and odorless gas that may seep through concrete foundations and basement walls
• Improperly-installed synthetic stucco
• Faulty septic systems

Tip: Hire an Inspector

To avoid these problems, you should always hire an objective home inspector before closing on your dream house. He or she should be a member of the American Society of Home Inspectors. You might want to consider making any offer to purchase a home dependent on a satisfactory home inspection. This is known as a “home inspection contingency.” In addition, the seller and real estate agents may owe a legal obligation to inform you of potential problems. Don't be shy about asking direct questions about the state of the house.

Common Mistake : Banking on a Bull Market

You can’t bank on housing prices in general going up or in your particular area. At any given moment, a hot housing market may cool off, making it much more difficult to sell your home and recoup your investment.

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