5 Reasons First Time Home Buyers Have Buyer’s Remorse
Over the past year, it has been a seller-friendly real estate market due to low interest rates and supply. As a result, renters vying for their chance to be first time homeowners are experiencing bidding wars and the fear of missing out. Because of this environment, renters are making quick decisions which are leading to buyer’s remorse. 5 Reasons Renters Have Buyer’s Remorse After Buying a Home include the following:
1. Closing Costs
Many first-time home buyers don’t realize how much closing costs add to a price of a home. For example, closing costs are generally 2% and 5% of the loan amount. According to real estate tech firm ClosingCorp, home buyers paid an average of $6,087 for closing costs on single-family homes in 2020. Closing costs include the following:
- Settlement and Recording Fees
- Title Policies
- Transfer Taxes
2. Other Purchasing Costs
In addition to closing costs, there are other expenses related to taxes, insurance, and home repairs when purchasing a home. These include the following:
- Home inspections
- Document fees
- Property taxes
- Home insurance
3. Unexpected Maintenance Expenses
As a homeowner, the days of calling a landlord about a repair are over. The responsibility and the expense are now yours, and the experience can be overwhelming. Common but unexpected maintenance expenses include:
- Plumbing repairs: running toilet, leaking faucet
- HVAC service: annual service
- Appliance repairs: ice maker, heating element
- Roof leaks: nail/shingle damage from wind
4. Buying A House That Isn’t Right
Because the real estate market is so competitive, some buyers have a fear of missing out and settle for a house just to buy a house. A 2021 survey by Bankrate, found that 64 % of millennial home buyers (25-40yrs old) have at least some regrets about their purchase. These regrets can include being unhappy with the following:
- Home’s size
- Commuting distance
- Remodeling expenses
5. Taking On Debt
Buying a house is expensive and usually requires the buyer to borrow a lot more money than they earn in a year. In some cases, the mortgage is higher than the buyer expected. As a result, the fear of being over extended is common. In addition, since very little of the mortgage principle is being paid off in the first few years, just interest, there is a fear of selling the house at a loss if something goes wrong.
Buyer’s Remorse is Normal
While no one wants to have buyer’s remorse, it’s important to realize that it is common. When making such a large purchase, there is bound to be anxiety about debt, savings, other things the money could have been used for. As a result, before purchasing a house, establish a detailed plan and budget for the following activities.
- Finding a home: realtor, search sites such as realtor.com, zillow.com.
- Purchasing a home: banker, mortgage broker, title company.
- Remodeling a home: paint, flooring, landscaping, lawn equipment, new furniture and appliances, etc.
- Maintaining a home: emergency budget and savings.
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