May 29, 2020 | 6 Minute read
It’s no secret that one of the best ways to learn is by making mistakes — after all, we all make mistakes. It’s what we do after that shapes what we take away from the experience. And this principle also holds true with buying a new home. No matter the age, common home buyer mistakes happen.
From choosing the wrong location to biting off more than you can chew with a mortgage, there are a number of potential setbacks that can complicate your home buying process — or, worse, turn your dream of owning your own home into a nightmare.
Fortunately, we’re here to help you navigate the buying waters. Here are some of the top mistakes that today’s homebuyers make at every age, so you’ll know what to look out for — and can hopefully avoid making some of these common mistakes.
You’ve probably heard that millennial homeownership has been sluggish in recent years, compared to previous generations. The United States Census Bureau recently reported that only 1 out of every 3 young millennials owned a home by the end of 2018. While this may not sound like a big deal, it’s nearly 10 percentage points lower than previous generations’ rates of homeownership in the same age range, based on research done by the Urban Institute’s Housing Finance Policy Center.
But even among those “twenty-somethings” who own a home, many — nearly 2 out of every 3, in fact — are suffering from what’s known as buyer’s remorse, or some level of regret about purchasing their current home (Bankrate). So just what kind of mistakes are home buyers in their 20s making?
Often, these young buyers are choosing the wrong mortgage. Some younger buyers get ARMs, or adjustable-rate mortgages, because they offer a low introductory interest rate. The thinking behind this is that they will be making more money in the future, and therefore will be better equipped to make the new (read: higher) monthly mortgage payments.
Unfortunately, adjustable-rate mortgages come with big risks, and even though interest rates have been at all-time lows for some time, they are beginning to creep back up. Imagine the predicament as interest rates increase and the value of your home decreases. To put it simply: it isn’t pretty.
Other mistakes twenty-something home buyers make is taking out a mortgage from the first bank they meet with, not planning far enough ahead into the future, or using up too much of their savings on a down payment. These buyers should consider working with a seasoned industry professional who can not only save them time, but also offer valuable advice and tips.
As more American adults are delaying getting married and starting a family, it’s no surprise that not thinking about their future is one of the biggest mistakes plaguing today’s home buyer in their 30s. When you’re shopping for a home, it’s important to think long term and consider whether or not you plan to start a family in the near (or not so near) future.
Even if you’re single, you should keep this principle in mind, as life can change surprisingly quickly. That sleek and modern 1 bedroom condo in the new high rise building may seem great now as a single young professional, but in a few years, it might not make any sense at all for your life.
If you’re buying a home in your thirties, it’s crucial to think long term. After all, you never know where you’ll end up in just a few short years. John Lennon said it best: “Life happens to you when you’re busy making other plans.”
Older home owners report fewer overall regrets when it comes to their home purchases, according to a recent study done by Bankrate. But that doesn’t mean that this generation is without faults when it comes to buying a home. Buyers in their 40s and 50s tend to have higher incomes and also more money set aside in savings — which can easily lead to overestimating their budget.
Sure, it may be easy to make the payments now, especially for a dual-income, working family — but what happens when one or both of you retire in 20 years, especially given that most mortgages typically last 30 years?
Figuring out an accurate and realistic budget is so important for any home buyer, but it’s especially important for those in their 40s and 50s. Decide the comfort level of your lifestyle and, most importantly, be realistic. And if you are married or in a committed relationship, always consult with your partner to decide whether or not you can really afford the mortgage over its lifetime.
In their 60s (and beyond), many home buyers are turning in their keys to the office in exchange for keys to a new vacation home. Buyers in this age range are often either newly retired or getting ready to retire. Usually, these home buyers are empty nesters, meaning they have more time and disposable income to travel to new places and see new things. Sometimes, they visit a new place and enjoy it so much that they decide to buy a vacation property there — sometimes even on a whim and without a second thought.
Of course, there is nothing wrong with a change of scenery or even purchasing a vacation home (assuming you can really afford it, of course). And it comes as no surprise that these homebuyers, in their 60s and beyond, report the least amount of buyer’s remorse when it comes to purchasing their home. However, you should make sure that you really get to know an area before committing and settling down there.
It’s no secret that buying a home and relocating (even if just for part of the year) is an extremely expensive process, so you want to make sure that you’ll have no regrets. Familiarize yourself with an area before you purchase, and you’ll be a step ahead in the home buying process.
Don’t find yourself making these common home buyer mistakes. Use and share these tips to help make sure that your home buying experience goes as smoothly as possible. If you’re in the market to buy a home, we are here to help.
At Reali, we are proud to offer a home buying process that you can trust. We help you find your perfect home at the best price, with the help of our experienced, local agents. Read for yourself what our clients have to say about working with us and what makes us different. Contact us when you’re ready to get started!