5 Most Common Home Buyer Regrets
You can imagine the importance I felt when I came across this article on Realtor.com. I never want my clients to experience buyer’s remorse. I know the key to preventing that is education and a game plan. The Caton Team is dedicate to educating our buying clients every step of the way. Please enjoy this article and my 2 cents in italics. – Sabrina
Half of recent home buyers say that if they could repeat the homebuying process, they’d do something differently, according to a survey by financial website NerdWallet.com. Respondents indicate that their biggest source of regret when buying a home was not preparing enough financially for homeownership. Here are some of the most common reasons for buyer regret, according to the survey.
- Purchasing a home that’s too expensive.Millennials and Generation X members were more likely than baby boomers to say they overspent on their home purchase, according to the NerdWallet survey. A 2015 MacArthur Foundation survey also found that more than half of consumers had to make sacrifices in order to afford their mortgage or rent. About 20 percent said they took an extra job, 17 percent stopped saving for retirement, and 14 percent accumulated credit card debt, according to the MacArthur survey.
Especially in the Silicon Valley where our real estate prices are 300%* higher than the average. So yes, those buyers had to bite the bullet if they wanted to stay in the Bay Area. However, they probably already have equity! Truly, for a first time homebuyer – getting into the first home is always a challenge, it is always costs more initially but in the long run – investing in real estate is a solid investment – where else can you live in your investment and gain equity!
- Purchasing a home that doesn’t fit their needs.About 5 percent of respondents to the NerdWallet survey say their home didn’t align with their homeownership goals. Housing experts recommend avoiding common homebuying mistakes like forgoing a home inspection, ignoring commute time, or choosing the wrong neighborhood. Also, consumers need to know what amenities they need. That’s not always easy: 7 percent of buyers say the amenities and features they valued most changed after buying a home.
Ouch – that is a tough one. I see this happen during the buying journey. Truthfully, in our experience, what a buyer wants when we sit down for our first appointment is often very different from the house they actually buy down the road. The key to not buying a house you do not need is to truly write down what you want in your home, what you feel you need in the home and then compare it to your price point and what homes in that area and price offer you. Then re-evaluate. Sometimes you don’t need the extra bedroom today – perhaps a smaller home in a better neighborhood will fill your needs today and down the road. You’ve got keep an open mind; you’ve got to evaluate every step and be open and honest with your communications to yourself and to your Realtors. Together – we’ll figure this out!
- Not putting enough money down.Low-down-payment loans can help buyers without robust savings get into a home, but some may later regret not saving more before taking on the costs of homeownership. Twenty-eight percent of millennials and 27 percent of Gen Xers say they wish they had saved more before buying their house, according to the NerdWallet survey.
The down-payment can me the hardest money to save! Having at least 20% is ideal– a buyer will avoid Private Mortgage Insurance with 20% down. (Although there are loans where you can bring in less that 20%, take out a second mortgage avoid PMI.) So don’t give up right away. Saving for the down is important but you most also factor in your current real estate market. If you cannot save money as fast as the market appreciates – then we have some strategizing to do. It’s best to get the most information you can before you start house hunting. The Caton Team offers our buyer clients an free, initial consultation to help you through the journey.
- Not being organized.Many home shoppers say they wish they had gathered paperwork before the mortgage application process and developed a system for keeping it organized. That includes W-2 or tax return forms, profit-and-loss statements for business owners, brokerage statements, proof of Social Security income, and evidence of child support payments. Home shoppers also need proof of their assets, such as documentation of down-payment gifts and copies of bank statements, as well as information on outstanding debts.
When you jump into buying a home, the first step is getting a home loan. That requires copious amounts of paperwork. And!!! That same darn paperwork will need to be sent, multiple times throughout the journey. I could go on and on about the paperwork. So let me be frank for a second. Buying a home will feel like a second job. There is only so much your Realtor and your Lender can do FOR YOU – most of the work must be down BY YOU. You will need to have your documents in order and easy to access. You will need to know your budget, your boundaries. It is a lot of work, it is your journey but let me assure you – it’s the best journey!
- Not shopping around for a loan.Half of borrowers take the first mortgage that’s offered to them, according to a survey by the Consumer Financial Protection Bureau. But shopping around for a mortgage with an interest rate that is even half of a percentage point lower can result in tens of thousands of dollars in savings over the life of the mortgage. Home buyers should compare more than interest fees, including the cost of private mortgage insurance and the loan’s APR (which is the interest rate, points, fees, and other charges all rolled into a yearly rate).
Here’s more work for the Buyer – but doing this work – this research – will pay off in the end. When The Caton Team meet with new buyers, we give them a list of our best lenders. Once you start applying for your home loan, you have 30 days to shop different banks and institutions. A Buyer will want to compare the Interest Rate offered (requires a formal loan application and credit check [Credit checks can cost the consumer money]), the fees charged by each bank, (loan fees, appraisal fees etc) and compare which is the best. Don’t forget to take into account customer service. The Caton Team would hate to see a deal fall apart because a buyer hired the cheapest lender they could find who didn’t respect the contract of the time lines. Time is of the Essence in the contract – it is even part of the contract. So don’t’ forget you get what you pay for.
Buying and Selling Real Estate is our Full Time Job – so if you have questions – we have answers. What can The Caton Team do for you?
Source: “The 10 Biggest Regrets People Have About Buying a Home,” CheatSheet.com (June 14, 2017)
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Thanks for reading – Sabrina
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