Congratulations! You’ve made it through the home-buying process. You feel a great sense of satisfaction and relief. Will you feel the same way over time?
According to a new survey from Bankrate.com, you have a decent chance of regretting something about your home purchase – especially if you’re a millennial.
While 79% of survey respondents consider owning a home a part of achieving the American dream, 44% have some regrets about the homes they chose. Almost two-thirds (63%) of millennials suffered from buyer’s remorse – more than any other generation and almost twice the rate of baby boomers.
Why are millennials facing greater regrets? Survey results suggest that they underestimated the running costs of owning a home. Underestimating maintenance and failing to account for unexpected costs was the most common regret in the survey, cited by 18% of respondents – and one-quarter of millennials.
Almost the same number of respondents regretted the size of home they chose. While 12% thought they bought too small of a home, another 5% thought they bought too large of a home.
Eight percent of respondents must have ignored the old adage – “location, location, location.” They considered their home to be in a bad location. Either they didn’t research the situation thoroughly beforehand, or some environmental factor changed over time.
Around 7% of respondents don’t think their home was a good investment – although homes should rarely be looked at as investments for the future. You will build equity and net worth as long as the housing market stays stable – but as a pure investment, the return on homes generally can’t compete with stocks and homes certainly aren’t as liquid.
A similar 7% of respondents regretted high mortgage payments, which may correlate to homeowners who thought they bought too big of a house and/or underestimated the costs. Despite the banking reforms instituted during the housing crisis, there’s usually a lender willing to loan more money than you can afford to pay back.
Six percent of respondents regretted their mortgage rate, thinking they could have done better. Interest rates are still low in historical terms but are subject to fluctuations – and a small change in interest rates can add up to thousands of dollars in interest charges over the life of your loan.
How do you decrease the chances of regretting your home purchase? Planning is the key. Start laying the groundwork well before you purchase a home.
Adjust your budget to allow for regular savings toward a down payment and use the savings period to determine what you want in a home and how much home you can afford. Use online guides to review the home buying process and avoid surprises at each stage.
Investigate available homes and research realtors during your savings period. Attend some open houses to get a feel for how to evaluate a home properly and make contacts with real estate agents to find one with whom you’re comfortable.
Keep your finances in order to keep your credit score high and qualify for the best interest rates available. You can check your credit score and read your credit report for free within minutes by joining MoneyTips. You’re already in a savings mode, which should help – but keep other debts as low as possible and make all payments on time every month. By keeping your finances in good shape, you’ll be able to search for homes at your leisure and strike when the perfect opportunity arises.
You may still have some regrets after your home purchase – but planning will decrease the chances and keep any regrets you do have to a minimum.
MoneyTips is happy to help you get free mortgage and refinance quotes from top lenders.