As mortgage costs continue to rise alongside home prices, some buyers are faced with another problem: regret.
Among recent homebuyers, 70% have at least one regret, according to a recent survey by HomeLight, an online real estate marketplace, which surveyed 1,620 people across the United States earlier this year. One of the main regrets – cited by about 1 in 5 respondents – was underestimating the total cost of buying a house.
A February Zillow survey of 2,000 new and potential homeowners found similar results: 75% of recent buyers had at least one regret about their purchase, including 38% of buyers who said they wished they had spent more time looking for a house.
Other common regrets in both surveys were home location, buying a home too quickly, and the unexpected cost of repairs or maintenance.
These sentiments make sense, as the market hasn’t been favorable to home buyers: homes are selling faster than ever and bidding wars are common, often with multiple bids above the asking price. And many buyers may have felt pressured to buy before interest rates rose further, as widely expected.
According to Zillow research released last week, mortgage rates are almost 20% higher than they were three months ago, adding hundreds of dollars in monthly costs for many first-time homebuyers.
However, this sense of shared regret suggests potential buyers might want to reevaluate what they can actually afford, says Lawrence Yun, chief economist at the National Association of Realtors.
He advises first-time buyers to “understand their maximum financial limit” before shopping for a home, and to reset their expectations if the type of home they want is no longer affordable. In this case, homebuyers might want to look for a cheaper home or find other compromises, like a different neighborhood or less space.
New homeowners are often surprised by the added costs of owning a property outside of the mortgage and down payment. These costs include property taxes, insurance, condominium fees, repairs and closing costs.
Some of the initial costs are also high. On average, buyers pay closing costs averaging 3% to 6% of the purchase price, per Quicken Loans. And a common rule of thumb for the cost of annual repairs is 1% of the total home value, or about $5,000 per year for a $500,000 home.
To help avoid unexpected costs, Yun says a good realtor should be able to provide a clear idea of what to expect so there are “no surprises.” You can also check out the Consumer Financial Protection Bureau’s guide on what to expect when buying a home.
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