A July 2022 survey by Anytime Estimate found a whopping 72% of new homeowners had regrets about their purchase.
The number-one reason? 30% of respondents felt they’d overspent. This was most common in first-time buyers, who were 21% more likely than repeat buyers to regret paying so much. Their second most common regret was feeling rushed – buying without considering the financial implications or ensuring the home was a good fit.
Safeguarding Your Home Purchase
That remorse reflects a lot of what was going on in the 2021 housing market with low interest rates, low inventory, and a glut of buyers.
It was a perfect storm. “Those conditions created a frenzy in the real estate market that now is cooling,” says Mark Wendler, branch manager in AAFMAA Mortgage Services LLC (AMS)’s Denver, CO office. “I’m not sure we’ll see anything like that again for some time.”
(Download our free Homebuying Guide)
Never Feel Rushed to Buy
Wendler is a fan of real estate, and owns properties himself, but never has he based his purchasing decision on which way the market was heading.
“When Members ask me about ‘buying low and selling high,’ I remind them that home-buying decisions should be based on your own situation. Buy a house only when you feel that you can afford the payment on that house, not based on where you think its value is heading.”
Historically, he notes, real estate appreciates over time, so when you can comfortably afford to buy (a good rule of thumb is to not have more than 30% of your budget going to housing) that’s when you should buy. “At the end of the day, if you're looking for a property you’ll stay in for five to seven years or so, there's a good chance you’ll make some money off of it.”
“Even if you buy when mortgage rates are higher than we’ve seen in a while, they will eventually head down to where you can refinance.”
“Take your time, learn about the home-buying process, and never rush into any deal until you’re satisfied,” he advises.
Related: Comparing Appraisal Requirements for VA, FHA and Conventional Loans
Don’t Overpay or Skip the Appraisal
With many buyers willing to jump in ready or not last year, sellers held the upper hand. Asking prices were high and they often had multiple offers, some well over the asking price or lacking safeguards.
“Buyers were willing to pay $50,000-$60,000 over the appraised value, which is pretty unheard of,” says Wendler. Always base your offer on the home’s appraised value, he says. “Values go up and down and if you have to sell at a down point, you’re going to regret overpaying.”
Also, you’ll want to visit the home in person and at all times of the day. “There are things that would be hard to spot on a Zoom call or FaceTime, like a crack in the foundation. Again, this is why a home inspection is so essential.”
If you’re purchasing a home from a distance, “If at all possible, have someone you trust physically walk through the house before you submit an offer on it.”
And never skip the home inspection. “You could end up paying thousands of dollars in repairs,” notes Wendler.
Related: Tips for Buying a Home Sight Unseen
Ask for Seller Concessions
As the market shifts and prices stabilize, sellers will be more motivated to make concessions or pay for some of your closing costs.
This could be a set sum like $5,000 or paying all or part of:
- property taxes through the end of the year
- title insurance (which protects you and your lender if someone comes forth with a claim for the home’s title)
- loan origination fees (what your lender charges for processing your loan)
- inspection and/or appraisal fees
- recording fees
- attorney’s fees (if required in your state)
- mortgage points (the interest you pay upfront for a lower interest rate)
“Last year, sellers might be looking at multiple offers and not even consider making a concession,” explains Wendler. “As property values soften, and fewer offers are coming in, the seller may be motivated to make concessions to close a deal.”
“The worst that can happen is that they say no. Then the ball’s in your court as to whether you still want to buy that house or move to something else.”
Be Ready for New Market
The market is shifting slowly to favor buyers so – unlike those who bought last year and now regret their purchase – be sure to take your time and learn all you can about the home-buying process, mortgages, and how to be a responsible homeowner before you make an offer.
“It was hard to advise anyone in 2021 because the housing market was so crazy but this year it’s a different ball game,” says Wendler. “Choose a real estate agent who knows the local housing market and who you are comfortable working with. Consult with an AMS Military Mortgage Advisor to run the numbers and be sure you’re ready to comfortably buy now.”
We’re Here to Help
Whether you’re just thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.
We also offer a free online homebuying guide.
Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-211-63080!