Buying a home is serious business, especially if you’re making the financial commitment for the first time. While millennials continue to make up a strong chunk of all home buyers, it turns out that they might be too easily swooned by beautiful homes that are Instagram worthy, and they end up with buyer’s remorse.
According to a new survey from Bankrate, nearly two-thirds of millennial homeowners have regrets about their purchase. After surveying 2,668 adults, including 1,493 homeowners, they discovered that 44 percent of all homeowners have regrets and that the number is even higher among younger generations. Approximately 63 percent of millennial homeowners who participated claim they would go back on their purchase if they could. Their biggest pain point? Unforeseen maintenance and hidden closing costs.
In other words, it’s the not-so-glamorous expenses—like purchasing a new air conditioning unit or replacing a leaking roof—that tend to catch first-time buyers by surprise. Sure, you might love the natural light that pours into the living room of your mid century post and beam house, but what condition is the air conditioner?
Here are three precautions to take to avoid buyer’s remorse.
Avoid Buyer’s Remorse – Stay within your budget
It can be tempting to push your wallet to the limit when you believe your dream home is at stake. But when it comes to your down payment, monthly mortgage bills, and additional expenses and repairs, “winging it” will only stress you out. The trick to avoiding a financial meltdown? Budget early.
For at least six months before your purchase a home, put yourself on a strict spending diet. If you are paying a rental amount that is less than what you expect to pay in mortgage payments, pay the difference into your savings account to see how day to day life feels with that expense. Can you eat out as often as you like? Can you comfortably pay the rest of your expenses? Do you have something left over for emergencies? If the answer is no, you may want to revisit your budget.
When the time comes to house hunt, avoid considering homes that are outside your budget and account for structural and cosmetic changes even if you don’t have plans for a full gut renovation.
Getting a home inspection, as well as purchasing a home warranty, are two more ways that first-time buyers can avoid big financial surprises, Scanlon says. A separate Bankrate survey conducted last year found that homeowners spend $2,000 a year, on average, on maintenance costs.
Think of how you want to live in the long term
Living simply in a small home is not for everybody. If you know that you need lots of space for your ceramic clown collection, big dogs, or tap dance practice, don’t settle for a little house that will only keep you from doing the things you want to do. Buying and selling a home is costly, and moving is a pain. We know we just told you to stick to your budget, but if you have to squeeze into a too small house to fit your budget, you will be miserable. If that’s the case, buying may not be your best option.
According to the survey, 12 percent of homeowners said that their biggest regret was buying a house that was too small. A smaller home that spans 1,000 square feet might meet your needs this year, but how will it measure up when you add a new tuba playing hobby, a pet, or child to the mix? Buyer’s remorse is expensive if it means you will be anxious to move on before you have had a chance to build equity into your home.
Become a local before you get the address to prove it.
Loving your neighborhood can be just as important as loving your home. After unexpected maintenance expenses and buying a house that is too small, participants claimed that their third biggest regret is that they put down roots in a less than ideal location. Sometimes, this cannot be helped. Work or family commitments may have you living in a neighborhood that is not your first choice, but a 10 minute drive in any direction may get something closer to a place you want to call home.
Educate yourself about your new home’s surroundings by popping into nearby restaurants, talking to potential neighbors, and familiarizing yourself with the traffic, noises, and other quirks. Find the streets and neighborhoods that feel good. That feel like home.
No house is perfect. Nobody looks forward to replacing the air conditioner instead of going on a vacation. But the right house will be the backdrop to every moment in your life. With the right information, and practical choices, you can avoid buyer’s remorse with your new home.