In cities where home prices are escalating (like Toronto and Vancouver) home buyers are more commonly rushing into purchases without becoming adequately educated in the processes and responsibilities involved in homeownership, pushed mostly from the Fear of Missing out, resulting in hasty and uninformed decisions and as a result, buyer’s remorse.
Not surprisingly, a new study shows a powerful link between being informed about home buying and buyer’s remorse. The bottom line is, when it comes to your finances, good decisions are informed decisions.
Findings from the Real Estate Council’s latest study include:
- Forty-seven per cent of buyers are willing to overshoot their budget by 10 per cent in order to secure the home that they want
- Forty-five per cent of first time homebuyers polled after their purchase wished that they’d made different decisions around their home purchase. Regrets include wishing that they’d seen more houses, interviewed more realtors, had a better understanding of housing and mortgage documentation, and done a property inspection.
“You should never rush into buying a home. It takes time to accumulate a down payment. It also takes time to view houses and find the appropriate professionals, like a lawyer or real estate agent, who will help guide you through the various points of the process. It will only benefit you to know what your obligations are, financially and from a contractual point of view,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“Rapidly rising house prices and limited supply in some housing types create pressure on home buyers to act quickly. Moving too fast can result in taking on too much mortgage debt, or getting in way over your head with costly repairs down the road. Even if your goal is homeownership, sometimes the smart decision is to walk away from a deal,” says Schwartz.
Here are some tips on how to keep your cool and to make good decisions around your home purchase.
Battle emotion with facts
The survey also showed that 35 per cent of respondents admit that they let emotions rule their decision to purchase more than they should. Buying a house is an emotional experience, no question. You can temper some of that emotion with cold hard facts to make sure that your decisions make sense financially and emotionally too.
Commit to becoming a savvy buyer. Do your research. There are a number of resources available, like Consolidated Credit’s Guide to Buying a Home.
Build up your circle
Enlist the support of a team to help you through the process. Your relationship with trained professionals is important in making good financial decisions. Take time to interview mortgage lenders, real estate agents and lawyers to find ones that you trust and that you feel will have your best interests at heart.
Make sure you align yourself with professionals with good references and who are invested in helping you learn by answering all of your questions.
It’s very common in areas where bidding wars are present to set a budget with elastic bands on it, giving you room to move up in a hurry if needed to secure a property. You need to be firm in setting limits low and not for more mortgage to win a bidding war, but for wiggle room in the event of other costs (e.g. home maintenance, improvements or other expenses). It may seem like you are limiting yourself in the moment, but you are actually freeing yourself to enjoy your home purchase.
If homeownership is on your radar, make sure you are up to speed on your finances and that your debts are under control first. Call one of our trained credit counsellors at 1-888-294-3130 or take a look at our free online debt analysis.