Whether you just left the closing table or recently unpacked your last moving box, nagging emotions or troubling questions fill your head. For some people, it's an unsettling feeling that keeps them up at night. For others, it's a litany of questions ranging from "What have I done?" to "How soon can I sell?"
Either way, buyer's remorse is a common experience for new homeowners.
You're not alone in wondering whether the timing was right or if you paid too much for your home. A recent study found that 64% of millennial homeowners regretted purchasing their current homes. But since there's no return counter for new homes, you'll need to figure out what's causing your remorse and if there's anything you can do about it.
Here are six common reasons for homebuyer's remorse and tips for resolving each one.
1. You discover major problems after closing.
In the rush to snatch up houses that appear then disappear from online listings in the blink of an eye, you might have accepted terms to buy a home "as-is." Issues might include black mold, leaky pipes, or a damaged roof.
Resolution: This doesn't mean the seller can't be held liable for issues if they knowingly failed to disclose needed repairs. You will likely need the assistance of a real estate attorney to work out the details if you believe the seller intentionally misrepresented the property's condition. Speak with a legal representative as soon as you can (states may vary on the amount of time in which you can pursue a claim).†
You could also help reduce some of the costs by turning to your home warranty plan or homeowners insurance policy. A company representative can confirm which repairs are covered and how much they will cost.
2. You can no longer afford a lifestyle you once enjoyed.
Building a solid financial future involves making choices. Housing remains one of the largest expenses in most people's budget, whether they rent or buy a home. But a new home purchase can force an unanticipated lifestyle change. For example, you may no longer be able to afford your annual winter ski vacation.
Resolution: Whether the new housing payment affects your vacation plans, or another favorite pastime, examine your budget and figure how much you can comfortably set aside. It might mean you can still enjoy your pre-homeowner lifestyle, but you'll need to be more mindful of ways to reduce expenses – such as traveling off-season or scanning discount websites.
3. Your financial circumstances changed.
A job layoff or divorce can turn your financial world upside down.
Resolution: If a life event reduces the amount you have available to make your mortgage payments, contact your lender or loan servicer immediately. Explain your situation. They might offer a hardship repayment plan that allows you to temporarily make lower payments until you get back on your feet.
If the situation is dire, you may need to consider selling your home. Holding on to a home you can no longer afford could damage your credit and make renting or purchasing a home in the future more challenging.
4. Your mortgage terms aren't as favorable as a neighbor who purchased their home at the same time.
If someone you know is bragging about record-low interest rates and special terms they received on their mortgage loan, it can fuel buyer's remorse. But, one thing they may not be sharing are the details that went into their loan approval. Did they also share copies of their income tax returns, assets statements, or credit history reports? Other loan details such as down payment, closing costs, and lender underwriting requirements are usually left out of these conversations, but they are critical in understanding why your terms differ from your neighbors.
Resolution: Ultimately, your financial situation isn't a mirror image of your neighbors and you'll never know the details of their transaction. Even if you did, this would not change your situation. But refinancing your home loan could result in more favorable loan terms than the ones you agreed to at closing. Explore your options by speaking with your mortgage lender. They can review your eligibility for a lower interest rate and better repayment terms.
5. Repair and maintenance expenses seem to pop up when you least expect them.
You can manage the new mortgage payment, insurance premiums, and annual property taxes. It's the unexpected home maintenance expenses that can shock your wallet. While individual repairs may be easy to manage, multiple repairs in a short time frame can drain your bank account if you're not prepared.
Resolution: Real estate experts recommend setting aside 1% - 3% of your home's value annually for home maintenance expenses. If you don't have room in your budget to save this amount, look for ways to cut back on monthly expenses until you've saved enough for your home maintenance fund.
You might find that cutting streaming services, reducing mobile data plans, or carpooling can quickly free up cash you can redirect into the fund. Another option involves consolidating credit card balances and other loans into a new loan with a lower interest rate. This could reduce your overall debt payment and be a source of additional monthly cash flow.
6. Your new home is too big, too small, or too close to your neighbors.
With limited home inventory and high demand, the pressure to make a purchase offer quickly is real. Looking back, you might kick yourself for not taking more time, but you should know that buying a home under such extreme pressure isn't as uncommon as you might think.
Sometimes buyers have no choice but to act quickly if they hope to purchase a home in a specific city or town. For example, buyers are known to submit offers sight unseen when:
● The property is located out of state
● You're out of town when the perfect home hits the market
● The seller is only accepting purchase offers that can close quickly
Failing to act fast could cause you to lose out to the next highest bidder.
Resolution: While there is little you can do about the home's location, you might be able to change the physical characteristics of the property. If you feel cramped in your new home, a remodeling project could give you additional space. If the home is too big, you might rent out the extra space and create another income source to help pay off your mortgage faster. And while you can't change your neighborhood, you may be able to do things to your property that help with nuisances like noise, nosy neighbors, or an unpleasant view from a window.
Homebuyer's remorse is a common feeling that could be related to real issues that appear post-closing, like a lack of proper budgeting or physical home defects. It could also be the understandable emotional stress that arises when making one of the largest purchases of your lifetime. In either case, try to adjust your circumstances to overcome your concerns.
If that's not possible, consider changing your mindset. Remember why you became a homeowner and how it fits into your long-term financial plan. It might be the perfect way to get over any regrets you have after settling into your new home.
†This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
Still on the house hunt? Download our free first-time homeownership eGuide that'll show you what to look for in your next home so you can avoid homebuyer's remorse. Download your eGuide here.
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