Raise your hand if this has happened to you: you’ve just bought something REALLY big, and REALLY expensive. You’re stoked. You’re excited. REALLY excited. And then you wake up one day only to say: “$#!%… I’ve made a huge mistake!” It can be like that (sometimes) when buying a home. Once the excitement of buying it wears off, regret can quickly take over. A recent study revealed that more than 60% of millennials aged 23 to 38 who own a home regret their purchase for any number of reasons. It turns out that much of the regret could have been prevented with a bit of planning and research.
No “ragrets.” via GIPHY
Millennial Home Ownership Trends
An estimated 36% of those aged 35 and under own their own home. Approximately 61% of those aged 35 to 44 are homeowners. With 60% of buyers in those groups regretting the purchase of their home, the numbers are… shocking. However, millennials aren’t alone. An estimated 44% of all homeowners who answered the survey were also unhappy with their acquisition.
Millennials buy homes using different methods than their parents, and they weigh their decisions against many different standards. Almost 60% of millennials used social media when searching for a home to purchase. Only an estimated 30% of them searched their preferred neighborhoods for homes on the market. Their homes are also worth less than homes purchased by other generations. One survey estimated the median home price for millennials to be $238,000.
Handling Expensive Home Maintenance and Repairs
Approximately 18% of millennials discovered home maintenance and repairs could be a lot more costly than they expected. In fact, home maintenance and repairs can cost thousands annually. For example, it can cost thousands to replace an A/C unit, or replace an old roof, and major appliances tend to go at the worst possible time. These expenses have to come out of the homeowner’s pockets, so millennials need to prepare and think ahead.
When the mortgage payment comes out, homeowners should set aside an extra 1% of that payment into a savings account, earmarked for maintenance and repairs. This way, they have an emergency fund they can dip into when the worst happens. If homeowners don’t use this money, it can be put onto the principle to pay their home faster. Or, the unused money can be invested into upgrades or renovations to help homeowners increase their home’s value.
Buying a Home that Meets the Family’s Needs
Another 18% of homeowners regretted buying their home because they felt it either lacked space or had too much of it. Some of this could be because many people shop for homes based on price point. In other words, they want a modest home or the one they see as having the best value. Alternatively, home shoppers may be looking to spend as much of the money they were approved for as possible. These tactics might work to buy cars, clothing, or entertainment items, but they are poor house hunting methods.
When buying a home, consumers need to consider their current needs and future plans. Do they need more than one bathroom? If they plan to have children, for example, their new home should have enough rooms or the ability to add rooms easily. The extra space can be used as a guest bedroom or office until the babies start to arrive. If the buyer’s children are in their teens and destined for college, a smaller home might be a better option.
To better understand what their needs are, people looking to buy their first home should make a list of everything they enjoy doing as well as their future plans. Then, they can find a home to suit those needs. This list will also become important when choosing the right neighborhood.
Location, Location, Location
Poor location was another common complaint among millennials. Some disliked the neighborhood. Other homeowners found the location of their new home was just inconvenient. Money may limit homebuyers to certain areas. However, in many instances, it’s due to poor planning.
Commuting can be stressful and expensive. Therefore, buyers should purchase a home that makes it easy to get to work, school, the gym and other places they visit frequently. The house needs to be close to those locations, of course but even just being close to an efficient bus route can be a lifesaver. If they can’t find a home that works with their needs and their budget, homeowners might be better to wait than to settle for a home that will make them miserable.
Financial Woes During Home Purchase
For a good number of millennials, their only regrets about homeownership came from their mortgages. Their payments were too high, or the interest rates were shocking. Some got stuck paying high closing costs, while others found the entire process of getting their mortgage took too long.
Before signing any paperwork, millennials should do some research. They should know how much money they’re willing to spend each month and how much money they have for a down payment. Potential homeowners should also shop around for a mortgage lender that provides good interest rates and even better service.
Potential homebuyers also need to ask mortgage lenders the right questions. What types of mortgages are available? How much are closing costs? How long will the process take? Does the lender have a recommended title company, escrow agency, and an attorney? Who is best to contact after the sale? Does the mortgage lender charge extra for an interest rate lock and other relevant features? What paperwork does the process require? It’s a lot, and a lot of information to remember, but the answers can prevent regret later.
Owning a home should bring you the sense of accomplishment and pride – not regret. Research, planning, and patience are vital to getting a house that can become a home. And while it can be difficult, it’s worth it to take the extra time to get the perfect home for the right price.