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A survey found that 63% of millennial homeowners regret buying their home. Lets go over this study, find out exactly where people are going wrong, and make sure this doesn’t happen to you. Add me on Instagram: GPStephan Merch: http://www.GrahamStephanStore.com/
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So lets get into these numbers: of the 63% of millennials who regretted their home purchase, these were their reasons:
18% said that maintenance and repairs were more costly than they anticipated.
12% said they bought too small of a house.
8% said they bought in a bad location.
7% didn’t think it was a good investment.
7% said the mortgage payment was too high.
6% didn’t get the best interest rate.
5% bought TOO BIG of a house.
First of all, 18% said maintenance and repairs were more costly than anticipated.
This can LARGELY be prevented by having an inspection done on the property before you purchase it, to understand EXACTLY what equipment is nearing the end of its life and might need to be replaced. This won’t uncover EVERYTHING, and sometimes things just happen outside of our control, but a good home inspection and home warranty plan could eliminate a SIGNIFICANT portion of unexpected repairs in the first few years.
Next, 12% bought too small of a house.
Home ownership is NOT meant to be something you buy, live in for a year, sell, and move on – I generally encourage everyone buying a home to do so with the expectation of holding on to it for at least 5-7 years. This means if you want a family soon, and you’ll need a larger home a year from now – then chances are, you’re better off renting.
Next, 8% bought in a bad location.
I can’t believe it. I apologize on behalf of all millennials out there. THIS IS ENTIRELY PREVENTABLE with even a mild amount of research. Spend a weekend driving around the area. Check out the neighborhood at different times of the day and night. Check crime reports and statistics. Speak to the neighbors or people walking their dogs or children. Ask them what they think of the area.
7% said they didn’t think it was a good investment.
The big flaw here is thinking that home ownership is automatically an investment when you buy something – because it isn’t. It absolutely CAN be a phenomenal investment, but this rarely ever happens by chance – in order for a home to be an investment, you must treat it like you’re running your own business. The value has to be there, the numbers have to make sense, and there must be upside in the deal…if you see you aren’t going to make money AHEAD OF TIME, don’t buy it.
Another 7% said the mortgage payment was too high.
When buying a house, it’s a good rule of thumb NEVER to max out what you can afford. This way, in the event of a job loss or reduction in pay, you aren’t locked in to a super high mortgage that was only affordable on the top range of your income. My recommendation is to buy a home that you can afford as though you’re paying it off in 15 years, BUT you get the 30-year mortgage because it gives you more flexibility with payments. This way, you’re not maxing yourself out and your mortgage won’t be too high…again, this one is easily preventable.
Then, 6% said they didn’t get the best interest rate.
When you buy a home, you’re encouraged to shop around and have lenders compete for your business. I’ve gotten HUGE reductions in my interest rate by getting pre-qualified between 3 lenders, then having each of them bid-down the other until eventually I’m left with the rock bottom rate. This is something that generally takes 1-4 days, and most of it is done over email – it’s fairly simple. But by doing this, I’m never left wondering whether or not I got the best interest rate.
And finally, 5% bought TOO BIG of a house.
So when you put all of this in perspective, here’s what I see:
About 85% of these regrets could’ve been avoided within one day of budgeting, planning, and investigating the property. The regrets people mention have MORE to do with the buyer’s lack of planning than it does from actually owning the home.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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