Avoid 1st time homebuyer regret
You’ve been ready for your first home for a while now. Finally, you’ve found the perfect place and are ready to make an offer. (Heck, you’ve already called moving companies!)
Let’s pump the breaks for a second. Before you move forward, we’re here to help you take a breath.
Buying a home, as you know, is a life-changing financial decision. And it can be overwhelming to do painstaking research, hire real estate agents, negotiate, inspect, and finally move into your first place as a homeowner.
Yet many buyers start second-guessing their decision after all that work.
This phenomenon, called buyer’s remorse, happens on the heels of many major purchases. And let’s face it: this is a tough time to be a homebuyer in today’s seller-friendly market. The stakes are quite high, which is causing some buyers to rush their decisions and end up in a property they have a hard time calling ‘home.’
After making such a big financial decision, it’s natural to feel some regret, especially when you’re bombarded by friends’ and family members’ opinions.
However, buyer’s remorse relates to an aspect of the purchase that truly and personally makes you unhappy—be it spending unbudgeted money on expensive repairs or settling for a less-than-ideal location.
None of that sounds great. You certainly don’t want to feel this way during your first housewarming get-together!
Here’s how you can avoid first-time buyer’s remorse:
Never sacrifice too much
If there’s such a thing as FOMO, then FOGI definitely exists! That is, the Fear Of Giving In. Think about it: you don’t want to be kicking yourself a year or five from now. Too many people regret buying a home because they compromised on more important factors than they should have. While it’s okay to be flexible, giving up too many features and functionalities that you hoped for in your new home could leave you disappointed in the long-term.
Before sailing off on your homebuying journey, create a wish list of items that you’d like in your new home. Then, rank your priorities. Start by setting aside nice-to-have features that, if necessary, you can do without. Whittle down your list to the non-negotiables: those must-have features. From there, it will be easier to avoid impulsive decisions. For example, if your heart is set on a particular location or home type that just isn’t available right now, keep on waiting for more listings to turn up instead of compromising.
Scan the neighborhood
“It’s a great space, but I wish I’d stood my ground a little longer to get something in a better location,” said Sara Peter, who bought a new home in July with her boyfriend in Rochester, New Hampshire.
Soon after they moved in, Peter realized she wasn’t happy with the location. In her previous neighborhood, she liked walking to shops and restaurants, but this one was outside town. To make matters more complicated, it takes her 40 minutes to commute to her office every day.
To avoid location-focused buyer remorse, scan the neighborhood and see if it fits your day-to-day lifestyle. Imagine yourself waking up and going through your routine in this new place. Ask yourself: “Do I prefer more of a quiet suburban life, a laid-back, wide-open country existence or a hustling city vibe?” Based on your choices, pick a neighborhood (and a home) that encapsulates those qualities and enables you to embrace your desired lifestyle.
Don’t overstretch your budget
Hooray! This is the one category where buyers seem to have an upper hand: financing. Mortgage rates today are at an historic low. That said, low mortgage rates can’t save you from worrying financial obligations if the sales price of your home is still outside your budget. Many new homebuyers regret breaking the bank to purchase a property far out of a comfortable price range.
And prices have risen. The median sales price in July 2021 was $360,000, up from $245,100 in July 2016. To add to buyers’ concerns, the rate at which the typical sales price of properties has been rising far outpaces the year-over-year increase in most peoples’ income levels.
So it’s sensible to not push past a reasonable budget. Try to follow the 28% rule, which dictates that your mortgage shouldn’t account for more than 28% of your gross income each month.
Otherwise, you may end up struggling to keep up with monthly mortgage payments. In times like these, who honestly needs that additional stress? Nothing will stifle the joy that comes with homeownership quite like the pressure that follows if you overspend. However, you can be both prudent and savvy in this competitive market, learning from others’ mistakes and experiences. Instead, do what you can to avoid buyer’s remorse and land a home you love, and you’ll wake up every day grateful for the place you have.