Younger homeowners often say they have regrets about their mortgage.
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Millennials, who accounted for nearly half of all home purchases in 2018, are becoming an increasingly large share of first-time home buyers. But like generations before them, they don’t have all the answers when it comes to navigating the home-buying process, including knowing what they can afford, cleaning up their credit scores, finding a mortgage that works for them and maintaining a home.
Overall, 81% of homeowners between 18 and 34 years old have at least one regret about their home, compared with 65% of those 55 years and older, a recent Zillow survey shows. The Zillow Housing Aspirations Report is a semiannual survey of 10,000 homeowners and renters in 20 large metro areas across the country. The survey asked the respondents about their views on homeownership, personal housing expectations and regrets.
Millennial and Generation Z homeowners tend to think their mortgage payments and interest rates are too high and have more regrets than older home buyers about the types of mortgages they have.
The report says the increased likelihood for regrets could be due to their inexperience with the home-buying process.
Younger home buyers are most likely still living in their first homes, which means they went through the process of finding a lender and getting a mortgage for the first time. Navigating this overwhelming process could explain why they are more likely to reveal they rushed into buying a home without considering all their options: 29% of younger homeowners regret rushing the process compared with 12% of older buyers.
There’s a lot to consider when shopping for a new home. From cost to appearance, size to location, potential home buyers can face a long wish list.
According to a recent survey by Porch.com, a platform that connects homeowners and home professionals, cost is the most significant factor home buyers consider when picking a new place to call home. In fact, over three-fourths of respondents listed cost as their primary consideration when shopping for a new home. The second biggest consideration was the home’s overall size. Only half of respondents listed the features of the home as very important.
Appearance was less important than location. Thirty-five percent cared about being close to work, and over 20 percent wanted to be near a grocery store, while curb appeal only mattered to 14 percent of people.
A Zillow report on consumer housing trends shows that Millennials (ages 24-38) contact more lenders when planning to buy a home than older generations, so they are doing their homework when it comes to finding the best mortgage partner but may have smaller down payments or more debt affecting their credit scores, and therefore their interest rates.
First-time buyers already make up nearly half of all buyers, and there is a growing population of Millennials set to turn 34, the median age of first-time buyers. For these potential new buyers, being educated and prepared can help avoid some of their common regrets. Realtor.com has stepped in with an extensive guide, “The Essential First-Time Home Buyer’s Book,” which gives home shoppers the tips and advice they need throughout every stage of the home-buying process, from saving money for a house to making an offer on a home.
For example, younger homeowners more often say they have regrets about their mortgage, likely resulting from the challenges young buyers face entering today’s expensive housing market.
Realtor.com’s home guide states that an easy way to get a sense of how much home you can afford is to approach a lender and apply for mortgage pre-approval.
“That’s where they’ll take a look at your financial past and present circumstances to determine how much money they are willing to lend you to buy a home,” the guide explains.
Jackie Hinton, a real restate broker for Center Coast Realty in Chicago, says in the Realtor.com home-buyer’s guide that “not only will pre-approval make it easier to eventually make an offer as a serious buyer, but it will also help you narrow down your property search criteria so you can focus better.”
A large majority of homeowners don’t envy their renter peers: Only 8% of homeowners wish they were renting instead, according to the Zillow Housing Aspirations Report.
Still, first-time homeowners do experience buyer’s remorse for a number of reasons, most notably unexpected repairs such as a faulty air conditioner or leaky roof. The study finds 36% of homeowners resent dealing with unexpected repairs and maintenance.
“With an apartment, you can just call your landlord to fix a leaky faucet or drafty window, but with a home you own, it’s all on you,” according to the Realtor.com home guide. “So ask yourself if you’re willing to forgo weekend bar crawls with friends in order to mow the lawn or patch the roof.”
Another big regret is the inability to relocate (27%) followed by too much yard work (25%). Respondents’ other regrets included their home is too small, the type of mortgage they chose, mortgage payments are too high, they rushed the home-buying decision-making process without evaluating all options, they don’t like their neighbors, they paid too much for their home, the interest rate is too high and the commute is too long.
Despite the tiny home craze and a trend toward downsizing, only 11% of homeowners think their houses are too large.