How To Avoid Homebuyer’s Remorse

Buyer’s remorse is a term that’s used to describe that feeling of anxiety or regret you feel after making an expensive purchase. Maybe it’s a designer handbag you don’t need or a vacation that quickly became more expensive than what you had budgeted.

Now, imagine feeling buyer’s remorse on the biggest purchase you’ve ever made — your home. Here’s a look at some of the different reasons why some homeowners come to regret their purchase, as well as some tips on how you can avoid homebuyer’s remorse.

What Is Homebuyer’s Remorse?

Homebuyer’s remorse is a feeling of regret, anxiety, or guilt that some buyers feel after they close on a home. Sometimes, it’s because the “hidden” costs are more expensive than expected. Other times, it’s because the home isn’t what they wanted, doesn’t meet their needs, or comes with unexpected problems.

Homebuyer’s remorse is quite common. According to a 2022 survey from home insurance company Hippo, 78% of respondents who had purchased their home during the prior year said they had regrets. 

Common Reasons for Homebuyer’s Remorse 

Here are some common reasons why some homebuyers may start to feel buyer’s remorse.

You think you overspent on a home

According to a 2022 survey from Clever Real Estate, the top reason that homebuyers regret their purchase is because they think they overspent. The survey found that 30% of respondents said they now think they paid too much for their home.

The National Association of Realtors reports this was especially common during the onset of the COVID-19 pandemic, when home prices skyrocketed. If mortgage interest rates drop in the future, then those who bought when rates were higher may realize they could’ve gotten a better deal if they had held off on buying. 

You’re struggling to keep up with the cost of homeownership

It’s one thing to be able to afford a down payment and closing costs to purchase a home — but it’s another thing to keep up with the ongoing cost of owning a home. Some homeowners may find they have little money left over to spend on other things, which is known as being “house poor.”

According to the Hippo survey, nearly half of respondents said that homeownership turned out to be more expensive than they had expected. 

You don’t like the location you bought in

If you’ve moved to a new area, you might not have had a chance to get a good feel for the location before moving in. For example, you may find that your neighborhood has turned out to be noisy at night and congested with traffic during the day. It’s also possible that future changes to the neighborhood could drive down property values. 

The Clever Real Estate survey found that 15% of homebuyers said they didn’t like the home’s location after they purchased it, and 15% said they didn’t like their neighbors.

You think you bought the wrong home

Some buyers who need to purchase a home by a certain deadline may think they didn’t get enough time to find the right one. The Clever Real Estate survey found that 26% of homeowners felt they bought too quickly, which was the second-most common reason respondents felt regret.

You don’t have enough space in your home

Some buyers purchase a home that’s smaller because it’s in a great location. Houses can look a lot bigger when they’ve been emptied out, but once you move all of your things in, it can feel crowded. This may put a damper on how you feel about your new home.

The maintenance is overwhelming

One of the biggest differences between renting and buying a home is that when you own it, you’re responsible for all of the repairs. According to the Hippo survey, 47% of homeowners said there was too much maintenance and upkeep involved with their home. 

Generally, it’s recommended that you set aside 1% to 2% of the purchase price of the home each year to cover routine maintenance, and keep in mind older homes typically require more maintenance. 

You miss your old home 

It can take time for a new space to feel like home — especially if you lived in your previous residence for many years. When you first move in, you’re not going to have the same kind of sentimental memories that you might have of your last apartment or childhood home, but that’s to be expected. But if time goes by and you still don’t feel like your new home can compare, then you may have regrets about buying it at all.

You discover undisclosed problems with the home 

There are few things worse than making a purchase of this magnitude, only to move in and realize there are flaws with the home you didn’t know about when you closed the deal. According to the Hippo survey, 47% of homebuyers said their home came with too many unexpected issues.

Typically, a home inspection assesses the condition of the home and lets the buyer know of any flaws, damage, or hazards. However, when buyers face heavy competition, some choose to waive the home inspection contingency to sweeten their offer and beat out other offers. This was especially true during the onset of the COVID-19 pandemic, when rising home prices created a red-hot seller’s market.

Tips To Avoid Homebuying Anxiety Before You Buy a Home 

Here are some steps you can take to avoid feeling too much homebuying anxiety.

Seek preapproval 

A preapproval letter can give you a rough idea of the price range for homes that you can afford. This can help you avoid buying a home that’s too expensive and becoming house poor.

Be realistic with your budget

It’s important to be realistic about what you can afford. You can use a mortgage calculator to figure out how much your monthly payment would be for a home based on the purchase price, interest rate, loan term, and location.

Create a wants vs. needs vs. must-haves list

It can be helpful to distinguish between your wants vs. needs vs. must-haves in a home, which can help you better understand your priorities. If you end up having to make compromises in your budget, you’ll know what you’re comfortable cutting.

Understand your mortgage options

Picking the right type of mortgage for your financial situation can help you save money and make your mortgage payments more affordable. Here are some factors to consider:

• Loan term. A longer loan term comes with lower monthly payments but often has a higher interest rate and costs more overall. A shorter loan term means higher monthly payments, but you’ll pay less over the life of the loan.
• Interest rate type. There are fixed rates and adjustable rates. A fixed interest rate offers predictability in your monthly payment. An adjustable interest rate can be lower at first, but then will adjust from time to time.
• Loan type. There are several different types of loan options available:
  • Conforming conventional loans are the most common type of loan and aren’t backed by any government program, but do meet government requirements to be sold to Fannie Mae or Freddie Mac.
  • Nonconforming conventional loans, or jumbo loans, exceed the limits for conforming loans, and usually are used to buy more-expensive homes.
  • FHA loans are insured by the Federal Housing Administration. They’re available to borrowers who have lower credit scores and down payments.
  • VA loans are backed by the Veterans Affairs to current service members, veterans, and their surviving spouses for a low or no down payment.
  • USDA loans are offered by the U.S. Department of Agriculture to low- and moderate-income borrowers in eligible rural areas for no down payment.

Don’t rush the process

If you rush the process of finding a home and make an impulsive purchase, you’re more likely to have regrets. Take your time to find a home that meets your needs and makes you happy. When you do find a home you like, visit it at different times of the day to understand what living in the neighborhood will be like. 

Work with an experienced real estate agent

Your real estate agent can be a vital teammate who’ll help you tour homes, make an offer, negotiate, and close on your new home. Ask friends, family, and colleagues for referrals, check agent reviews online, and be sure to interview a few different candidates to make sure they’re knowledgeable about the local market before selecting one.

Know the costs of homeownership

Buying a home comes with both upfront costs as well as ongoing costs. For example, you can expect closing costs to be 2% to 5% of the purchase price. You’ll also need to make monthly mortgage payments, which often includes the cost of homeowners insurance and property taxes. And remember to leave some space in your budget for repair and maintenance costs. 

Get the home inspected and appraised

If any major flaws or defects are revealed during the home inspection, you can negotiate with the seller to have them complete repairs or cover the costs. If some problems are deal breakers and you’ve included a home inspection contingency in your purchase and sale agreement, you can back out of the deal without penalty.

Your lender also will require you to have the home appraised to determine the fair market value of the home. This protects both you and the lender by confirming the that purchase price and loan amount are fair given how much the home is worth.

Include contingencies

Contingencies are conditions in the purchase and sale agreement that must be met for the deal to go through and can help protect your purchase. Common contingencies include:

• Home inspection contingency. Should the inspection reveal any major issues with the home, you can negotiate with the seller or back out the deal without losing your earnest money deposit.
• Mortgage contingency. If you are unable to get financing, you can cancel the deal without penalty.
• Appraisal contingency. If the appraisal comes in lower than expected, this contingency allows you to back out of the sale. 
• Title contingency. If the title search reveals any claims or liens against the property, you can walk away.
• Home sale contingency. If you’re unable to sell your current home to fund the purchase, you can back out without losing your earnest money.

Some buyers may feel homebuyer’s remorse because they waived certain contingencies to strengthen their offer, which led to them inheriting expensive problems. For example, without a home inspection contingency, you may move into a home that requires costly and ongoing repairs.

Communicate your concerns with a real estate expert

If you’re a first-time homebuyer, the homebuying process may be confusing to you. Ask your real estate agent questions and lean on their expertise to explain any language or terms you don’t understand so you can know exactly what you’re buying. 

Tips To Avoid Homebuyer’s Remorse After You Buy a Home

It’s normal to feel some anxiety once you’ve closed on your new home. Here’s a look at some of the ways you can minimize the chance of feeling homebuyer’s remorse.

Stop looking at new listings

The homebuying process can take a lot of a time and money, and continuing your home search in hope of finding a better home can only make your remorse worse. While you may have gotten in the habit of looking at the latest listings, focusing on the success of buying a new home can help you appreciate what you have.  

Avoid nitpicking

Most homes are imperfect — particularly if you bought an older home. Don’t worry too much about minor flaws and imperfections. You’ve already spent a considerable amount of money on your home purchase, and minor repairs can be completed over time. 

Remember why you bought the home

Refer to your wants vs. needs vs. must-haves checklist to remind yourself why you bought the home in the first place. It can be easy to focus on the negatives, so consider making a list of pros and cons to highlight the positive qualities.

Focus on the positives of homeownership

Even if your home might not be perfect, it can help to focus on the advantages of being a homeowner. For example, each monthly mortgage payment you make builds equity, which is an opportunity denied to you as a renter. You can tap into your equity to cover home improvement costs down the line.

Reevaluate your budget

Struggling to keep up with monthly mortgage payments is one reason people may feel homebuyer’s remorse. It can help to reevaluate your budget and see if there are areas where you can cut back. If you can reduce your monthly overhead, it may alleviate the feeling of being house poor. 

Decorate your home to personalize it

It can take a some time for a new house to feel like home, but decorating and personalizing the space can expedite the process. Whatever your taste happens to be, adding a personal touch can go a long way.

Consider getting a roommate

Roommates aren’t just for renters. If a friend or family member moves in and can contribute to your monthly mortgage payment, it will free up some room in your budget. Additionally, you may feel homebuyer’s remorse because it can be lonely living on your own, and a roommate can make the home feel livelier.

Explore refinancing options

If you’re experiencing homebuyer’s remorse because your mortgage is too expensive, keep in mind that you can refinance to adjust your rate and terms to make your monthly payment more affordable. However, refinancing costs money and is ideal when interest rates drop, so it’s important to first consider the pros and cons.

What Are Your Legal Options When You Have Homebuyer’s Remorse? 

If you find yourself feeling homebuyer’s remorse, unfortunately your legal options are limited. You may have heard that federal law guarantees the right of rescission, where you’re able to cancel a loan within three days of closing. However, this only applies if you’re refinancing a home. The only way to back out of the deal without penalty is for reasons listed as contingencies in your purchase and sale agreement.

Explore your state’s laws

State laws can vary when it comes to how long you have to back out of a deal without penalty. For example, in California you have 17 days to invoke a contingency after closing. 

FAQ: How To Avoid Homebuyer’s Remorse 

Here are answers to some common questions about homeowner’s remorse.

The Bottom Line on How To Avoid Homebuyer’s Remorse

Buying a home is a major financial commitment, so it’s normal to have a little bit of apprehension about being able to pay your mortgage each month. It’s possible to feel triumphant about becoming a homeowner but also to wish some aspects of your home were different.

However, there are steps you can take before, during, and after closing on a home to avoid feeling full-blown homebuyer’s remorse. It’s important to take your time with the homebuying process and understand all the costs to make sure you stay within your budget. That way, you won’t end up in over your head and house poor.