Borrower’s Remorse

Borrower’s Remorse

NEARLY TWO-THIRDS OF MILLENNIALS HAVE NEW HOMEBUYER REGRETS, SURVEY FINDS

In today’s highly competitive real estate market, it’s all too common for buyers to rush into a deal that doesn’t fit their budget or suit their needs. Millennials, in particular, have the most regrets after buying a home, according to a new Bankrate survey.

Buyer’s regrets are even more of a factor in the pandemic, with sight-unseen offers and contingencies waived to win the bid.

Homebuyer regrets broadly fell into two major categories: financial and physical. In general, the survey found that the older the buyer, the less likely they were to have misgivings about their purchase after the fact. In all, 64 percent of millennial homebuyers (ages 25-40) have some regrets about their purchase compared with just 33 percent of baby boomer buyers (ages 57-75).

KEY FINDINGS

• Maintenance costs can be a big unexpected issue for new homebuyers

• Shopping for a mortgage remains important because some buyers think they paid too much in interest

• A home’s layout and location are key sources of angst for those who purchase a home

• Regrets about the costs of homeownership

By far the biggest regret among recent homebuyers was not being prepared for maintenance and other costs associated with homeownership. More than 20 percent of millennial homeowners said they felt the costs of homeownership were too high, and that number jumped to 26 percent among younger millennials, ages 25-31.

“It can cause a rude awakening if one fails to plan for inevitable expenses,” said Mark Hamrick, Bankrate’s senior economic analyst. “It isn’t a question whether such expenses arise, only when and how much they will cost.”

WORRIES ABOUT GETTING THE BEST MORTGAGE RATE

Millennials were also the most likely to say they didn’t get a good mortgage rate, or that they overpaid for property. For example, 12 percent of millennials said their rates were too high, and 13 percent said they agreed to a sale price that was more than it should have been.

Although mortgage rates are near historic lows, it remains important to shop around for the best offer. Even a few basis points difference in interest can mean a savings (or extra cost) of thousands of dollars over the life of your loan.

According to a study Freddie Mac conducted in 2018, a borrower who got one extra rate quote saved an average of $1,435 over the life of a typical $250,000 mortgage. Moreover, 80 percent of those borrowers saved between $966 and $2,086 by shopping around with one additional lender. The more you shop around, the more savings you rack up. Borrowers who got five rate quotes saved $2,914 — on average — with 80 percent of those shoppers who got five quotes saving between $2,089 and $3,904.

REMORSE OVER THE HOME ITSELF

While financial frustrations topped the list of regrets for new homebuyers, many survey respondents said they also came to realize their new place was literally not the right fit.

Millennials again were the most likely to be unhappy with their new home’s physical characteristics. According to the survey, 15 percent of respondents from that generation said they disliked their new property’s location. Meanwhile, around 30 percent felt the home was not the right size.

“Because the market is so competitive, you have less time to make a decision on a homebuying purchase than you do on a laptop at Best Buy,” said Olmsted. “You’ve already had, possibly, a couple of offers not accepted, you feel that pressure to make a decision and put an offer in.”

FINANCIAL HOMEBUYER REGRETS

Top Money-related Regrets For Recent Homebuyers By Age Group