5 Things to Avoid Home Buyer Remorse
5 Things To Avoid Home Buyer Remorse
Buying your new home can be exciting. However, in order to minimize any home buyer remorse there are certain things that should be kept in mind. Here are five things to keep in mind during the home buying process that will help minimize your regrets.
- Do a Home Inspection – Do a home inspection even if your home is new construction or rehabbed. You want your own independent person inspecting the home to make sure there are no hidden costs and so that you have an idea of what to expect in terms of future improvements or repairs needed. Also, sometimes a “pretty” rehab will hide faulty construction or short cuts that won’t pass city inspection or code. You will want to make sure that the proper permits were pulled as part of the construction project.The other good thing about getting an inspection done is you learn more about the functionality of your new home. Where is the water valve? Is the home properly insulated? Are there structural issues in the basement, etc.. In conjunction with the inspection, you may also want to consider a home warranty. This will give you additional peace of mind in case emergencies happen.
- Create a new household budget – Creating a household budget allows you to figure out how the new mortgage will fit in with all of your other financial obligations. Are there additional or increased expenses associated with your new home and/or new location? I remember helping a friend determine her budget when house hunting and the cost of gas at that time changed the picture of how much she could afford to spend on a mortgage. If you are saving for retirement or your children’s college tuition or just saving for a household emergency fund, the bank’s projection of how much house you can afford may be different from your reality. Also, keep in mind daycare or tithing since these can be significant costs in your monthly budget. Leave enough room in your budget to not be knocked out by an emergency and to be able to enjoy yourself from time to time. You don’t want to be house rich and cash poor.
- Pay more attention to function vs style. Upfront in your search, determine and write down your non-negotiables in a new home — is a master bath a must-have? How about an updated kitchen? These are the deal breakers. Also, what are the things that may not be deal breakers but are still important to you? Many times when looking at some of the new rehabs, you can be drawn into the look of the home but it may not be functional for the day to day of your household. For instance, are multiple bathrooms important? Is there space for a microwave or dishwasher if not already installed? Is there adequate counter space in the kitchen or storage? Do you want minimal stairs? As you look at different homes, you may add to or take away from your list but the list will keep you focused on what is most important to you.
- Take into consideration likely life changes. The average length of time that buyers expect to live in their new home is 13 years according to a recent study published by the National Association of Home Builders. Are there likely changes that you can anticipate in the next 2-3 years? Are you likely to have children? Have an elderly parent move in? Is your income likely to decrease? Are you close to being an empty nester? Think about the changes that you can reasonably anticipate and determine if this changes the home you choose.
- Know upfront the likely amount of funds needed for your home purchase – Before starting your home search, you should have the funds in place (or a plan to get them) to complete the purchase. You should also have some funds set aside for unexpected costs once you move. Buying a home requires a down payment and closing costs (including escrow for property taxes and insurance). However, there may also be costs for moving, repairs or utility deposits. You’ll never be able to plan with 100% accuracy but hopefully with some upfront planning you can minimize the stress. The lack of planning may not have a long-term impact but it has the potential to make those first few weeks financially uncomfortable.