Blog posted On August 28, 2018
Applying for college, going on a job interview, and hosting Thanksgiving dinner can all be stressful life events, but according to a recent survey, none of those compare to buying a home. Out of 2,000 Americans surveyed by Homes.com, 40% of respondents cited buying a home as the most stressful event in modern life and 33% admitted to shedding tears at some point in the home-buying process.
Why do Americans think buying a home is so stressful?
For most Americans, buying a home is the single biggest purchase they will make in their life. Buying a home is also the first appreciating asset most Americans will own, and the first step toward building wealth, so it is a largely safe investment. First-time home buyers especially struggle with what to expect when buying a home. 38% of first-time home buyers said the process took much longer than they anticipated. How can you make your home purchase less stressful?
Understanding Home Financing
13% of survey respondents reported that they thought they overpaid for their home after purchasing. Most first-time home buyers anticipate the down payment, but some are not aware of closing costs and other fees associated with mortgage financing. Using a down payment assistance program is one way to offset the cost of the down payment and allocate more savings toward closing costs. With over 2,000 down payment assistance programs available nationwide, most home buyers, especially first-time home buyers, are eligible for some form of down payment assistance. Working with a housing counselor is one way to determine what down payment assistance is available for you and how to apply for various programs.
Additionally, the monthly mortgage payment is made up of four components: principal, interest, taxes, and insurance (PITI). Principal payments go toward the total amount borrowed, the cost of the home minus the down payment. Interest rates vary depending on the type of mortgage, amount borrowed, credit profile, and numerous other influencers. Taxes change from region to region. Insurance refers to mortgage insurance, which is usually needed when the buyer puts down less than 20% for a down payment. A knowledgeable loan officer will be able to give you a detailed breakdown of your mortgage-related costs so there are no surprises.
20% of survey respondents said they did not feel confident when looking for a home. In today’s busy market, many home buyers are wary about the amount of competition they will face. The best way to overcome this lack of confidence is to be prepared. Working with the right real estate team is one way to improve your buying power. Real estate agents gain access to listings before they have gone public, can set and schedule home tours for you, and help negotiate your offer. Offering more money is not the only way to outbid another buyer on a home. Many home sellers are also simultaneously in the market to buy. A faster transaction could be more beneficial to them than a higher offer. Partnering with a mortgage lender that can ensure a fast transaction is another way to make your offer more competitive and approach the closing table with confidence.
Don’t Get Too Attached
28% of survey respondents reported feeling “heartbroken” when they failed to get a property they put a contract in for. It is not uncommon for home sellers to get multiple concurrent offers on a home. Your offer can be rejected for many reasons out of your control. Although buying a home is an emotional experience, it’s important to not get too attached to a specific property. The Homes.com study showed the average American looked at least six properties before settling on “the one.” It’s important to be patient and set realistic expectations in your home search.
Although buying a home will inevitably be stressful, home buyers can mitigate the stress as much as possible by following these steps. The best way to prepare yourself for a home purchase is to do your research, be confident, and set realistic expectations. The right real estate team is imperative to facilitating a smooth transaction.