A recent poll discussed on CNBC showed that forty-four percent of Buyers regretted that they had not chosen a larger home.
I started thinking of the ramifications of that study, since, of course, if you are going to choose to buy a larger home, you will need to spend more money, make a larger down payment, get a higher mortgage. I have noticed, that most people seem to buy at the top range that their budget will allow, so how do you then buy a larger home?
The following are some thoughts on how to avoid Buyer’s remorse:
(1) Do your analysis first, your search second. Look at what your needs will be, the neighborhoods or subdivisions that will suit those needs before you actually start searching for properties. Don’t fall in love with a property first and try to make it fit into your needs.
(2) Look at different neighborhoods. You might find the house that is the proper size, but it is going to require living somewhere other than you first choice of neighborhoods. Considerations of schools, proximity to work or other amenities may figure into initial research, but may need to be for.
(3) Check your credit. Make sure you know what your score is and whether there are things you can or should be doing to improve it before you apply for a mortgage. Pay down debt. Contest errors in your credit. The better your credit, the better the terms you can negotiate for your mortgage. The better the terms on your mortgage, the more house you can afford.
(4) Make sure you have considered the additional costs of buying a home – repairs, replacing appliances, upgrades – as well as property taxes, property insurance, maintaining the property and upkeep. The size of the property and your purchase price are going to affect your tax rate, so considering where you are buying and the manner in which taxes are assessed in that area might have a big impact on what you can afford.
(5) Although there are different schools of thought on the impact of paying off mortgage debt, I have been a proponent of doing so. Paying off a mortgage faster than the terms under which you have taken out the loan will allow you to pay less interest, build equity faster or, if property values go down, protect against owing more than your property is worth. It will also allow you to have more for a down payment when you are ready to move.
Remember, planning a home purchase, instead of falling in love with a property, and trying to make it fit your situation, will help you avoid being unhappy with it long term.