Whether it’s your first home purchase or your fifth, buying a home always comes with a lot of emotional baggage. As your closing day draws near, that emotional baggage can start to grow. Was this really a good deal? Would you have been better off waiting for another property to come on the market? Will this home meet all your needs? These and more questions can fester in a buyer’s mind like an open wound. Chances are though that all you’re feeling is a bit of buyer’s remorse. This is something almost every buyer goes through. At its least, buyer’s remorse can cause undue anxiety. At its worst, it can lead to a buyer sabotaging a perfectly good deal. To help you prepare, here’s a look at the most common homebuying regrets and what you can do to overcome them.
1.) Regret: The Neighborhood Isn’t What You Thought it Was
Any home purchase means a neighborhood purchase and you’ll want to be sure you picked the right one. Your choice of a neighborhood doesn’t just affect the aesthetics of a home. It also affects the crime rate, exposure to natural disasters, school districts, and ease of commuting. Even if the home itself is perfect, a poor choice of a neighborhood can overshadow that.
The best way to avoid any regrets over your choice of neighborhood is to research it thoroughly before you make an offer. Neighborhoods can feel and look very different at night or on weekends, so make visits at different times of the day and week. If you’ve got kids of school-going age, then check what school district the neighborhood is in. For crime statistics, check with the local police station. For commute times, use Google Maps to get a rough estimate. The more time you spend researching the neighborhood the less doubt you’ll feel come closing day.
2.) Regret: The House is Too Small/Big
Most buyers today will do a lot of online research before they step foot in a potential new home. This can tell you a lot, but it won’t tell you how much house you need. To answer that, you need to be there in person and imagine how you would use the space. To make the most of this, you’ll want to have a list of what your main needs are. Don’t just think about your current needs. If you expect to live there for 5-10 years or more then think about your future needs as well. Does it allow enough space for an expanding family? Do you have enough room for future alterations or extensions?
Doubts like these are as common as rain near a real estate closing. You can avoid this by having a clear idea of your needs both now and in the future. Doing so will also help you stay on budget and avoid buying a bigger home than you need.
3.) Regret: The Maintenance Costs Are Too High
This is where most buyer’s remorse comes from. You find what looks to be a great home only to discover later how much it can cost to maintain. First-time buyers, in particular, are often shocked to learn how much it can cost to keep a home standing. The usual advice is to maintain an emergency fund of 1-3% of the homes purchase price each year. This will help you cover any home repairs as they arise. Savvy buyers should factor in this 1-3% emergency fund when determining their budget.
If you’re buying a resale, there’s also a chance the home may need extensive repairs before it’s habitable. You can cover yourself against this by including an inspection contingency in the purchase contract. This will allow you a way out of the deal if the inspection finds that extensive work is needed. It’s also worth getting a home warranty as added protection.
4.) Regret: The Home is a Poor Investment
It’s a common saying that homeownership builds wealth. But only when the location is a desirable one. Buyers should be thinking about the day they’ll sell even when they’re just looking at potential homes. A huge regret for many is to only learn later that the home they purchased doesn’t stand to gain much in price appreciation and may even have to be sold at a loss. This is why buyers need to familiarize themselves with the local real estate market and what the future holds for it.
Your Exclusive Buyer’s Agent can be an invaluable source of information on this. Make them earn their commission and ask them about the resale value of the home. Have a firm understanding also of what your investment goals are and what you expect to get out of the home. This might mean paying a little more for a home in an up-and-coming neighborhood.
5.) Regret: The Mortgage is Too High
Many first-time buyers go in without understanding the full costs of a mortgage. Monthly payments don’t just mean the interest and principal. They can also include taxes, insurance, and any HOA fees. The best advice is to ensure your monthly mortgage payments don’t exceed 28% of your monthly income. You can get a rough estimate of your closing costs and monthly payments by getting preapproved for a mortgage. Doing so will also tell you what you can expect to borrow and what your budget is.
The reality is that money matters and if you’re not clear on what your numbers are then you’re setting yourself up for disaster. Be completely open with your lender on what your financial situation is and stick with your budget. Additionally, keep adding to your down payment fund as you look for a home. Making a larger down payment can lower your mortgage payments by hundreds of dollars every month.