When you buy a home, you know how much your mortgage is going to be. You know what you bought the home for, you know how much of a down payment you have and so, the amount of your mortgage really shouldn’t be an area of regret. It’s not surprising then, that a recent survey done for CIBC found that 60% of homeowners have experienced buyer’s remorse; and that the source of the remorse isn’t the mortgage at all, but the amount of “extras” that come with it.
This is perhaps why buyer’s remorse is so often seen among first-time homebuyers. On paper, it all looks fine. You’ll be paying approximately the same to your mortgage as you’re paying in rent now (and maybe even a little less,) and now you’ll be working towards an investment rather than throwing money down the drain. It’s no wonder buying a home is so exciting! But what’s so often forgotten is that there are all kinds of additional expenses that come with home ownership. Plumbing repairs, furnace and other appliance repairs, regular maintenance, utilities, property tax, title insurance, legal fees – all of these are extra costs that come with being a homeowner. And they can be exhausting.
“That’s not surprising,” says Farhaneh Haque, director of mortgage advice at TD when speaking about the survey results. “It’s not the sticker price that shocks first-time homebuyers,” she says. “It’s the costs associated with the sticker. We have so many home buyers that after the fact feel they could have used information, that they could have had more preparation going into home ownership. If you are renting, you pay that one shelter cost and that’s all you have to think about. But as a homeowner, there’s more.”
Much more. So, how much should you budget in for all those “extra” costs? Haque says about $500 – $700 a month. She also says that using the right professionals to guide you through the process can help you have that preparation that so many homeowners are wishing they had.
A buyer’s agent she says, is important, because they can guide them through the purchase process and help them save costs wherever possible. They’ll also be able to point out certain expenses that the homeowner might have to deal with right away, other conditions of the home that could cost them in the future, and how much those costs are. Realtors will also have a good idea about what the property tax usually is in an area and other costs associated with being a homeowner.
A good mortgage professional is the other person any homeowner should work with, Haque says. Getting pre-approval on a loan or speaking to a broker can help people understand how much they can really afford on their mortgage. Homebuyers should ask their brokers about additional costs that could crop up; and ask them to consider those when coming up with the final mortgage amount.
Buyer’s remorse isn’t uncommon in Canada. And it is because many simply aren’t aware of the costs of being a homeowner. There are a few things you can do though, such as budgeting in a little extra money every month (or a lot) and working with the right people. So that when you move into your home, it’s all rosy and no remorse!