As mortgage costs continue to rise alongside home prices, some buyers are dealing with another problem: regret.
Among recent home buyers, 70% have at least one regret, according to recent survey by HomeLight, an online real estate marketplace, which polled 1,620 people across the U.S. earlier this year. One of the top regrets — cited by roughly 1 in 5 of those surveyed — was underestimating the total cost of buying a home.
A February Zillow survey of 2,000 new and potential homeowners found similar results: 75% of recent home buyers had at least one regret about their purchase, including 38% of buyers who say they wished they had spent more time searching for a home.
Other common regrets across both surveys were about the home’s location, buying a home too quickly and the unexpected cost of repairs or maintenance.
These sentiments make sense, as the market has not been favorable to homebuyers: Homes are selling faster than ever before, and bidding wars are common, often with multiple bids over the asking price. And many buyers may have felt rushed to buy before interest rates rose further, as was widely expected.
Mortgage rates are nearly 20% higher than they were three months ago, adding hundreds of dollars in monthly costs for many new homebuyers, according to a Zillow study published last week.
However, this shared sense of regret suggests that potential buyers might want to reevaluate what they can actually afford, says Lawrence Yun, chief economist at the National Association of Realtors.
He advises new buyers to “understand their maximum financial limit,” before they shop for a home, and to reset expectations if the type of home they want is no longer affordable. In that case, homebuyers might want to look for a cheaper home, or find other trade-offs, like a different neighborhood or less space.
New homeowners are often surprised by the extra costs of owning property outside of the mortgage and down payment. These costs include property taxes, insurance, condo fees, repairs and closing costs.
Some of the upfront costs are steep, too. 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 value of the home, which is about $5,000 a year for a $500,000 home.
To help avoid unexpected costs, Yun says that a good real estate agent should be able to provide a clear idea of what to expect so that there are “no surprises.” You can also check out the Consumer Financial Protection Bureau’s guide on what to expect when you buy a home.
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