Your first home purchase is more than a major investment. It’s a rite of passage, right up there with your first job.
In addition to checking an adulting box, buying a house means taking on a slew of financial responsibilities that can last for literal decades. It’s a big decision in every sense of the word — and unfortunately, it’s one that many first-time buyers end up regretting.
No Regrets: What to Think (and Re-Think) When House Shopping
Some things you really do have to learn the hard way — but ideally not the ones that cost hundreds of thousands of dollars. If you’re in the market for your first home, here are some things to think twice about.
Keep Maintenance in Mind
Given that few of us ever spend six figures on any other single asset, the base cost of a home is probably already enough to make you woozy. But ask just about any new homeowner and they’ll tell you the mortgage payment is just the beginning.
When you’re an owner (as opposed to a renter), you no longer have the benefit of simply phoning your landlord to come fix your toilet or tinker with your hot water heater. Now, all those little problems are up to you — and they can add up to big costs.
In fact, the unexpected high cost of maintenance is often a top reason new homeowners say they regret the purchase of their first home.
So when calculating how much house you can afford, be sure to add in a substantial buffer for the “uh-oh” factor. It’s going to come, so don’t let it catch you off guard.
It’s important to think carefully about what size house will actually fit your needs.
If you’re a young couple planning on having a child or two, a 2/1 might not cut it for long. Or, if you’re retired and living on a fixed income, downsizing from the 3/2 with the garage and big yard where you raised your family could bring a welcome reduction in expenses.
Although life is unpredictable, taking the time to think through these kinds of decisions while home shopping could keep you from having to shop for a home again sooner than you’d like.
While it’s easy to be wooed by lots of space, does anybody really need a 3,000-square-foot behemoth? The larger your house, the more you’ll spend on heating, cooling and furnishing it — not to mention the time it takes to keep it clean.
In many metro areas, homes closer to downtown tend to be smaller (and often more expensive), while the suburbs are lined with bigger homes built for families. But keep in mind the potential tradeoffs, like a longer commute that costs you more in time and gasoline.
Of course, smaller homes are generally cheaper — and with the nationwide median price of a new house hovering just under $300,000, some buyers may feel they have to go small to make buying accessible at all.
Although the tiny house movement and its attendant mindful minimalism are on the rise, you might want to think twice before buying too small. According to Trulia’s 2017 Real Estate Regrets report, 17% of first-time buyers wish they’d chosen something larger—a figure that jumps to 29% among 18-34 year olds.
And if you’re willing to do your research (and sink some money into repair work), buying a foreclosed home could mean lots of square footage at a fraction of the cost.
Houses are Expensive
Yes, this one sounds like a no-brainer. But when you’re caught up in the excitement of it all — and comparison shopping with the McMansion next door — $150,000 can start to look like a bargain.
And it may well be. But it’s still $150,000, a sum that would take most of us years and years to save. Unless you’re able to buy the house in cash, you’re also going to be paying interest on that figure, as well as property taxes, homeowner’s insurance, and most likely other costs like PMI.
So it’s not surprising that almost 10% of buyers say they wish they’d been more financially secure before they made the big decision — or that more than a third of Americans who haven’t purchased a home say the reason is the cost is too darn high.
Although building home equity can be a great financial benefit, sometimes, renting really does make more sense. (Here are some tips on how to tell whether renting or buying makes more sense in your case.)
Still Ready to Become a Homeowner?
If you’ve given it lots (and lots) of thought and you’re ready to take the big leap into homeownership, don’t worry—we’ve got tons of resources to help you do it as effectively as possible.
Jamie Cattanach’s work has been featured at Fodor’s, Yahoo, SELF, The Huffington Post, The Motley Fool and other outlets. Learn more at www.jamiecattanach.com.