Buying your own home is a huge financial decision and an important milestone in life. If you hope to own a home someday, it will require a lot of time and planning to get there. However, it will also become a crucial asset and key component in your retirement planning. Making a large investment like this will always come with doubts. While this is normal, you want to do everything you can to ensure you make the right decision. Since your home will likely be the most expensive purchase you ever make, you don’t want to look back and have regrets. Unfortunately, these are 5 regrets that many homeowners face, and often wish they could go back in time to correct.
5 Regrets Many Homeowners Eventually Face
According to a recent survey, 70% of people who bought a home have at least one regret about their home-buying experience. The harsh reality is that current market conditions have led to some fierce competition for real estate. Many people have been caught up in bidding frenzies, unseen buyers, and large cash offers. While cost-based regrets dominated the feedback, here are 5 regrets that many homeowners face.
1. Paying way more than they had planned.
If you have been paying attention over the last few years, then you already know that it has been a seller’s market. People who hadn’t even thought about selling their homes put them up for sale because of the massive equity gains. And, most people are flooded with offers within the first few days, driving offers way above the asking price.
Unfortunately, this makes it difficult for first-time buyers on a limited budget and nearly impossible without good credit. Those who are set on buying a home are sometimes forced to spend more than they had planned. Others decided to postpone their search altogether. In the survey, 22% of people felt they overpaid while another 18% said they underestimated the costs of home repairs. These are the types of expenses that could set your financial planning back several years.
2. Compromising on important features of the home or contingencies of the sale.
With the higher price of homes, you can’t get as much for your money nowadays. But if you can’t compromise on price, then you have to sacrifice important features or contingencies to stay under budget.
If the price is the most important factor, then you will likely have to make compromises on the age, condition, location, size, layout, number of bedrooms and bathrooms, outdoor space, proximity to necessities, school districts, or other important features. Sadly, this often means settling for less than you had hoped for from your home.
Others have adjusted their timelines to accommodate the sellers, even going as far as agreeing to rent back options. Many people also reported that they offered larger down payments, didn’t ask sellers to handle repairs, skipped inspections, or sent personal letters and gifts to win them over. When homes are scarce, people are willing to take extreme measures to get what they want.
3. Not refinancing when interest rates were low.
For those who own their home, their mortgage is probably the biggest expense in the budget. Your home will be a top financial priority. But, it will require a large portion of your income for decades of your life.
Therefore, you should seize opportunities to reduce your monthly payments by refinancing your mortgage rate. You can monitor market conditions to determine when interest rates drop. And if you have a good credit score, you may qualify for a lower interest rate. This will allow you to pay off your mortgage faster and keep more of your income. But before you refinance, make sure to compare rates and terms between lenders to get the best deal.
4. Delaying home improvement projects.
Home repairs and maintenance come with the responsibilities of owning a home. However, many people put them off because of the expense and inconvenience of living in a construction zone. If you have this view, you may want to reconsider your perspective.
Although it can be expensive, it is better to address issues before they become bigger problems that will cost even more. Plus, it will add value to your home.
Unfortunately, my parents learned first-hand the cost of delaying necessary repairs. They had several projects around the house that had been neglected for years. After the pandemic began, materials costs skyrocketed. It also became more difficult to find contractors and required longer wait times to get the work done. Eventually, waiting was no longer an option as some things had become a safety hazard. So, they were forced to eat the cost.
Rather than procrastinating on necessary repairs, a home improvement loan can provide the capital you need. And, you can ensure you don’t miss out on a good opportunity when the time is right.
5. Not having a home warranty.
Every lender will require you to have homeowner’s insurance to cover losses and repairs resulting from damage. A basic policy will protect you against fire and smoke damage, weather damage, theft, and vandalism to your home, outbuildings and outdoor spaces on the property, heating and cooling systems, large appliances, furniture, and clothing. It will also provide living expenses if you need alternate lodging during repairs.
However, you should carefully read the details of your policy to ensure you have the coverage you need. And if you need extra coverage, a home warranty can insulate your finances against surprise home expenses. While homeowner’s insurance will cover many things, you may be stuck footing the bill for plumbing and electrical issues, water damage, mold, foundation repairs, roof replacement, etc.
If you purchase a supplemental home warranty, they have hotlines that offer 24/7 assistance. They will help you handle problems quickly without depleting your financial resources.
Buying Too Quickly
Based on the survey responses, it seems that one of the greatest regrets homeowners face is rushing into a decision. Nearly 20% of respondents felt they decided too quickly. Had they spent more time searching, they may have been able to find the perfect home within their budget. Although there are no guarantees, especially in today’s market, you don’t want to have these regrets. If you are facing too many obstacles, it may be wiser to wait for conditions to improve.