Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make:

1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.

Source: CNNMoney.com

Foreclosure sales increased 92.3 percent in March 2010 compared with March 2009 and 24.2 percent compared with February according to ForeclosureRadar’s March foreclosure report.  Nearly 80 percent of foreclosure sales in February were for properties returning to lenders; the remaining properties were sold to third parties, primarily investors.

Notices of Default declined significantly in March compared with the prior year, when filings reached record levels as lenders caught up on a backlog of filings.  Third-party purchases of foreclosure sales set a new record in March, surpassing 4,000 properties for the first time.

Homeowners are on pace to spend $128 billion this year in remodeling, up from $116 billion last year, according to the National Association of Home Builders (NAHB).  However, the return on investment has been decreasing.  The percentage of costs recouped at resale was approximately 64 percent last year compared with 67 percent in 2008.  Based on that, experts advise against major remodeling for homeowners who plan to sell within a year as they are not likely to recoup the expenses of the remodel.

Homeowners planning to remain in their homes for the long term may want to consider adding energy-efficient windows, roofing, and doors as these enhancements recover a large percentage of their outlay.  For example, energy-efficient steel entry doors can return more than 100 percent of their average $1,172 cost by helping to reduce energy use.

Source: California Association of Realtors