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A Guide to Avoiding Homebuyer’s Remorse

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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John Watkins, 27, in Tampa Bay, Fla., set a personal goal in high school to own a home before he turned 30. He accomplished his goal three years ago when he decided on a new build in a quiet but rapidly growing suburb. The home checked all of the boxes on his wish list: It had an open layout, high ceilings and a large master suite.

But coming from living in an apartment, Watkins said he didn’t consider the enormous responsibility that came with homeownership.

“I can’t say that I completely regret the purchase, but I don’t think I would do it again if I had the chance,” Watkins told MagnifyMoney. “I vastly underestimated the time and expenses that go along with having a home, especially in an HOA.”

Watkins may be best described as a conflicted homeowner. While he’s proud to have achieved his goal of homeownership and is glad he bought the home as an investment, (he said similar homes in the area rent for $1,000 more than his monthly mortgage payment), the extra costs and work often outweigh the positives.

In addition to the mortgage payment, Watkins said he now has additional expenses he didn’t think of before, like water softener and salt, cleaning supplies, lawn treatment, pest control and holiday decorations. On top of that, he said, there’s an endless list of things that need to be done with the home.

“Days where I just want to go home and relax, I’m forced to work in the yard or face fines,” Watkins told MagnifyMoney. “Just yesterday I came home after work, opened the door and was smacked with a wave of heat as if I had just opened an oven door.” He spent the rest of his evening unclogging the AC condenser drain line with a shop vacuum.

3 key tips to avoid homebuyer’s remorse

A recent Bank of the West study found 68% of millennial homeowners experience buyer’s remorse for one reason or another. Of those homeowners, 44% reported having issues with space after closing. Most often, they discovered property damage, felt stuck after purchasing or realized the space didn’t quite work for their family. In addition, 41% of millennial homeowners with buyer’s remorse said they felt they had stretched themselves too thin financially with the home purchase.

To help prospective buyers avoid similar regrets, MagnifyMoney asked real estate and financial experts for their best advice for aspiring homeowners.

1. Rent before you buy

“Don’t be afraid of renting if you need a place to live but aren’t committed to the location or can’t find a house that meets your nonnegotiables,” said Arielle Minicozzi, CFP at Chandler, Ariz.-based Sphynx Financial Planning.

You can consider renting a home as a test run. With renting, you will have the opportunity to experience what it’s like to actually live in the home without the commitment to a mortgage. Renting gives you the chance to see if the space works for your family, get an accurate survey of the neighborhood, evaluate the HOA and see if you’re OK with the new commute to work.

“Even though you’re not building equity, renting is far more cost-effective than buying a home and selling it shortly thereafter, and less [of a] headache than finding a renter or making other arrangements if you need to move.”

2. Check out the neighborhood

“Your neighbors and the neighborhood make a world of difference when it comes to loving your home,” said Lorena Peña, chairperson of the San Antonio Board of REALTORS.

Peña suggested prospective buyers drive through the neighborhood at different times of the day to see what the area is like at different times. The drive also serves as a way to test the roads for your commute. Peña recommended going for a test drive in the morning and evening and around school drop-offs and pickups.

“When you visit the home you’re considering buying, take off your blinders. Be sure to notice the lawns of the neighbors, how well kept they are and, if you see any neighbors outside, stop to say hello. The current neighbors have firsthand knowledge about the neighborhood,” said Peña.

If the neighborhood has an HOA, Peña recommended looking at the rules before you buy, as you want to ensure your personal standards align with the association’s.

Jorge Guerra Jr., the residential president of Miami Association of REALTORS recommended you “identify your needs and what you are looking for, whether it pertains to safety, commute or the community,” prior to your test drive so when you go, you can accurately evaluate whether the neighborhood meets your needs.

3. Always get an inspection

“The inspection period is the best time to perform due diligence on ensuring that the property meets your needs or the needs of your family,” Guerra told MagnifyMoney.

Guerra recommended hiring a licensed professional and said that’s especially important for first-time homebuyers.

“Hiring a specialist in the four primary areas of electric, roofing, plumbing and mechanical (A/C) is your best bet — you definitely want to have the expert on your side,” said Guerra.

The inspection will cost a fee that most often won’t be included in closing costs. According to HomeAdvisor, the average home inspection costs around $326. Making sure you get the inspection done can help you avoid more costly or more severe repairs you’d be responsible for if you bought the home as is.

The inspection report should detail cosmetic and structural damage. Once you have the inspection report, you can decide whether to ask the seller to make the repairs prior to closing, or handle them on your own.

4 ways to avoid stretching yourself too thin financially

If it’s not a physical regret homebuyers had, it was a financial one. About 41% of the millennial homeowners with regrets in the Bank of the West study said they felt they had stretched themselves too thin with their home purchase.

Below are a few tips prospective homebuyers can use to keep their home purchase in line with their financial resources.

1. Start planning early

“The two best things a prospective homebuyer can do to avoid feeling stretched too thin are to set a budget well before looking at homes and to save more than he or she thinks is necessary,” Minicozzi told MagnifyMoney.

Saving enough begins with planning early. Like with most financial goals, the earlier you plan, the better. Minicozzi said starting earlier can give you more flexibility when prioritizing your goals and buy some time to weather any market fluctuations so “you can afford to invest your money more aggressively than someone whose time horizon is shorter.”

Minicozzi added taking your time finding a home that meets your budget may take some of the pressure off when you’re deciding on a home.

2. Consider the hidden expenses that come with homeownership

Remember, the down payment isn’t all you’ll be responsible for once you become a homeowner. In addition to the down payment, you may need to pay for closing costs like the application fee, appraisal fee, primary mortgage insurance and other fees. Closing costs generally amount to about 2% to 7% of the home’s purchase price.

Try not to use everything you’ve saved on the down payment and closing costs. If you have leftover funds, Minicozzi said, you can use them to make home repairs or updates, purchase furniture, start an emergency fund or invest.

3. Reduce your down payment

According to the Bank of the West survey, about 56% of millennial homeowners have dipped into retirement funds for down payments. While there are advantages to making a sizable down payment, like avoiding mortgage insurance or qualifying for a better mortgage rate, many options exist for buyers looking to make smaller down payments.

“If a buyer has good cash flow but little savings, using a lower down payment loan — like a conventional 3% down or a USDA loan with 0% down — is a good option, as long as he or she also has an emergency fund or builds one up,” said Minicozzi.

We’ve rounded up some of the best low down payment mortgages here.

4. Shop around with different lenders

Comparing your loan offers with multiple lenders is one of the best ways to save money on your mortgage.

For example, a recent study from MagnifyMoney’s parent company, LendingTree, found borrowers in the Tampa area (where Watkins’ home is) could save $73 in monthly payments or, up to $871 a year on a median home price of $225,000 by comparing rate offers. To get an idea of your potential savings, you can start your loan search here.

What to do if you feel stuck with a home you regret

“When someone purchases a home, the sale is final, even if they regret the purchase,” said Peña. “However, there are options for the new homeowner.” She suggested consulting your real estate agent to weigh your options if you find yourself feeling remorseful after closing on a home. Peña suggests considering the following choices.

Sell the home

You could try to sell the home right away and get out of the mortgage. However, Peña warned: “Purchasing a home is a sound investment and, depending on the market, immediately putting it up for sale does not guarantee you will get the same price from another buyer. “

Rent out the home

You keep the home and use it as an investment property. In this case, you could rent the home out while you build equity and sell it later on. If you don’t have experience or don’t feel comfortable managing the property, you may want to consider hiring a reputable property manager.

Renting is what Watkins is planning to do with his home. He said he and his partner will likely continue to live in their Tampa Bay home for another five years, refinance if possible and then rent it out.

“We should make enough profit from that to fund the majority of our next place (and possibly our forever home), which will be a similar home but with an acre or two of land,” Watkins told MagnifyMoney.

Vacation rentals: If the area is popular with tourists, you may have the option to use it as a vacation rental.

“Those that may regret purchasing a home can easily cover the mortgage with this side business while building equity,” said Peña.

Re-evaluate your budget

If you’re feeling cash-strapped now that you have a mortgage and other auxiliary expenses of homeownership, Minicozzi recommended reviewing your budget to see where you can cut back. If you’ve cut back all you can on discretionary expenses, the next step is increasing your income. Consider asking for a raise, picking up a side gig or possibly selling valuable items.

“If you have extra room in the home, you can even think about renting out some of your space. Just make sure to talk to a financial planner or tax expert to evaluate the tax implications,” said Minicozzi.

Bottom line

You’re pretty much stuck with a home once you buy it, so you should take care and try not to rush your decision-making process. If you are considering a purchase, try out the tips above to feel secure.

Watkins gave the following advice based on his personal experience: “I believe that no matter which path you go down, you’ll always find things that you like and things that drive you nuts. Do more research than you think you should, go visit the neighborhoods that catch your eye and talk to the current residents. Find a place that matches your lifestyle and not just your idea of a perfect home.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Maine First-Time Homebuyer Programs

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Do you want to live in a state with gorgeous seaside views and fresh lobster? Maine just might be the right place. Whether you’re new to the state or already call it home, if you need help coming up with a down payment, Maine offers several programs designed to help first-time homebuyers make their homeowning dreams a reality.In January of 2019, we researched first-time homebuyer programs in Maine, which included a review of the Maine State Housing Authority website and other state resources. Here’s what first-time homebuyers in Maine need to know.

Maine first-time homebuyer programs

The Maine State Housing Authority administers several federal and statewide programs aimed at providing affordable homeownership for Maine residents.

Their programs provide fixed-rate mortgages and assistance with down payments and closing costs to help put homeownership within reach. Their mortgages also come with payment protection, in the event that buyers face unemployment.

Eligibility for Maine assistance

Homebuyers who wish to take advantage of one of the Maine assistance programs must meet income and purchase-price limitations. Income and purchase-price limits vary, depending on how many people live in your household and the county in which you buy a home. You can find a list of current income and purchase-price limits online.

Eligible properties include new and existing single-family homes, owner-occupied two- to four-unit apartment buildings and condominiums. Manufactured homes located on owned land and built within the last 20 years are also eligible. However, the purchase-price limit for single-wide and double-wide manufactured homes is $150,000.

MaineHousing First Home Loan Program

The MaineHousing First Home Loan Program provides low fixed-interest-rate mortgages with low or no down payments. It can also provide up to $3,500 in assistance with down payments and closing costs.

Features

The First Home Loan Program offers

  • Thirty-year fixed-rate mortgages
  • Low or no down payments
  • Up to $3,500 in down payment and closing cost assistance
  • Low fixed interest rates
  • Low- and no-point options
  • The option to finance between $500 and $35,000 for necessary home improvements in the same loan

Eligibility

In order to participate in the program, you must

  • Have a minimum credit score of 640.
  • Take an approved homebuyer education class before closing if you take advantage of the down payment and closing cost assistance option.
  • Contribute at least 1% of the loan toward the purchase price of your home (the cost of the homebuyer education class counts toward this 1%).
  • Be a first-time homebuyer (not have owned a home within the past three years) or a veteran, retired military or on qualified Active Duty.
  • Meet household income limits, which vary by county and household size.

How it works

The First Home Loan Program is available through a network of approved banks, credit unions and mortgage companies. You can begin the application process by contacting one of more than 40 approved lenders. The lender can help you determine how much home you can afford, decide on the right mortgage program and take you through the process of applying for and closing on the loan.

Learn more

MaineHousing Salute ME & Salute Home Again programs

The Salute ME and Salute Home Again programs help qualified active duty, veterans and retired military personnel achieve homeownership by giving them a 0.25% discount on First Home Loan mortgages.

Features

The Salute ME and Salute Home Again programs offer

  • An additional 0.25% discount on 30-year mortgages offered through the First Home Loan Program
  • Low or no down payments
  • Up to $3,500 in down payment and closing cost assistance
  • Low fixed interest rates
  • Low- and no-point options
  • Option to finance between $500 and $35,000 for necessary home improvements in the same loan

Eligibility

In order to participate in the programs, you must

  • Take an approved homebuyer education class prior to closing if you take advantage of the down payment and closing cost assistance option.
  • Have a minimum credit score of 640.
  • Be on active duty or have been honorably discharged from military service, have served on active duty for 180 days or within a war zone.
  • Use your new home as a primary residence.
  • Meet household income and purchase-price limits, which vary by county and household size.

How it works

MaineHousing programs are available through a network of approved banks, credit unions and mortgage companies. You can begin the application process by contacting one of more than 40 approved lenders. The lender can help you determine how much home you can afford, decide on the right mortgage program and take you through the process of applying for and closing on the loan.

MaineHousing Mobile Home Self-Insured Program

The MaineHousing Mobile Home Self-Insured Program allows manufactured/mobile home buyers to get higher loan-to-value (LTV) mortgages and pay a higher interest rate instead of mortgage insurance premiums (MIPs).

Features

The Mobile Home Self-Insured Program offers

  • Up to 30-year loan terms
  • Down payments as low as 5%
  • Up to $3,500 in down payment and closing cost assistance
  • The option that 3% of the purchase price may come from a seller contribution
  • The option to add up to $35,000 to the loan for repairs

Eligibility

In order to participate in the program, you must

  • Be a first-time homebuyer (not have owned a home in the past three years), have only owned an unattached manufactured/mobile home on leased land, or be a veteran.
  • Pay a maximum of 33% of your income toward housing and have a maximum total debt-to-income (DTI) ratio of 41%.
  • Have a minimum credit score of 640.
  • Meet income limits, which vary by county and household size.
  • Have a maximum purchase price of $150,000.
  • Purchase a single-wide or double-wide manufactured home that is less than 20 years of age and is permanently attached per code at the time of closing.
  • Move into the home as your main residence.
  • Not use more than 15% of the home for a trade or business.
  • Contribute a minimum of 3% toward the purchase of the home.

How it works

MaineHousing programs are available through a network of approved banks, credit unions and mortgage companies. You can begin the application process by contacting one of more than 40 approved lenders. The lender can help you determine how much home you can afford, decide on the right mortgage program, and take you through the process of applying for and closing on the loan.

National first-time homebuyer programs

If you want to buy a home in Maine, you’re not limited to first-time homebuyer programs available through the Maine State Housing Authority. There are other federal programs available to help first-time homebuyers across the country. If you’re interested in learning about national programs, start by checking out LendingTree’s guide to first-time homebuyer programs nationwide.

This article contains links to LendingTree, our parent company.  The information in this article is accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Janet Berry-Johnson
Janet Berry-Johnson |

Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here

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Rhode Island First-Time Homebuyer Programs

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Buying a new home is a scary prospect — and not just because change can be overwhelming. Figuring out how to afford a down payment, closing costs and monthly mortgage payments can feel like an Olympic gymnastics routine. Luckily, first-time homebuyers in Rhode Island have several programs that can provide assistance.

Whether you’re looking to pay less in taxes or you need help covering a down payment, the state’s solutions may be able to help you. We reviewed the state’s offerings to help you pick the best program for you.

Rhode Island first-time homebuyer programs

Rhode Island Housing offers affordable housing programs designed to make living in the state more attractive and affordable — no matter your financial situation. Not sure how to start your homebuying journey? The organization offers first-time homebuyer education for all buyers to help you understand the ins and outs of this complicated process.

But there’s real money available, too. The programs below offer down payment assistance, tax credits and affordable mortgages. They can even help you avoid paying mortgage insurance.

Eligibility for Rhode Island assistance

All of Rhode Island Housing’s first-time homebuyer programs — except for the First Down Program — require purchasing a house that costs no more than $441,176. Your new home can be a one- to four-unit home or a condominium.

And, of course, you must be a first-time homebuyer.

FirstHomes100

What is it?

Rhode Island Housing’s FirstHomes100 program helps first-time homebuyers at any income level afford a new place. The program combines a traditional mortgage with down payment assistance funds so you can finance your home 100%.

The FirstHomes100 program offers first-time homebuyers

  • One hundred percent financing
  • Assistance with down payment or closing costs through low-interest, 15-year loans
  • The ability to forego mortgage insurance in exchange for a slightly higher interest rate.

Requirements

In order to qualify for the FirstHomes100 program, you must

  • Purchase a house that costs no more than $441,176.
  • Buy a one- to four-unit single-family home or a condominium.

How to apply

If your income is less than $93,623 for a one- or two-person household, or less than $107,667 for a household of three or more, you’ll need to work directly with Rhode Island Housing’s Loan Center. Homebuyers with higher incomes can contact any participating lender to begin the loan application process.

Learn more

FirstHomes100+

What is it?

FirstHomes100+ is the sister program of FirstHomes100. It allows first-time homebuyers to not just purchase but also renovate the home of their dreams. Once buyers are approved for a FirstHomes100 mortgage, they’ll work with a consultant from the U.S. Department of Housing and Urban Development (HUD) to determine what repairs are needed. Once the final costs are determined, and if they exceed $5,000, the loan will become an all-inclusive FirstHomes100+ loan.

FirstHomes100+ provides buyers with

  • One hundred percent financing to buy and renovate the home of their choice.
  • Assistance with down payment or closing costs through low-interest, 15-year loans.
  • The ability to forego mortgage insurance in exchange for a slightly higher interest rate.

Eligibility

To be eligible for FirstHomes100+, first-time buyers must

  • Purchase a house that costs no more than $441,176 and that requires a minimum of $5,000 in renovations.
  • But a one- to four-unit single-family home or a condominium.
  • Complete FHA 203(k) Homebuyer Education before closing.

How it works

Buyers with incomes of less than $93,623 for a one- or two-person household or less than $107,667 for a household with three or more people will work directly with Rhode Island Housing’s Loan Center. If your income is higher, you can contact any participating lender to apply for the program directly through them.

Learn more

FirstHomes Tax Credit

What is it?

The FirstHomes Tax Credit is a federal tax credit for part of the mortgage interest you pay in a given year. A tax credit directly reduces the tax amount you owe. You can claim the tax credit every year, making this program helpful for years to come. Reduce your taxes even further by itemizing and deducting any other mortgage interest you’ve paid.

The FirstHomes Tax Credit offers buyers

  • A mortgage credit certificate for 20% of the total mortgage interest you pay each year.
  • Maximum credit of $2,000 a year.

Requirements

To be eligible for the FirstHomes Tax Credit, buyers must

  • Purchase a house that costs no more than $441,176.
  • Be buying a one- to four-unit home or a condominium.
  • Plan to live in the home as their primary residence.
  • Have income of less than $93,623 for a one- or two-person household, or less than $107,667 for a household of three or more.
  • You don’t have to be a first-time homebuyer if you live in the federally targeted areas of Central Falls, Pawtucket, Providence and Woonsocket.

How to apply

Ready to get started? Get in touch with Rhode Island Housing’s Loan Center or reach out to any of the approved lenders.

Learn more

First Down Program

What is it?

The First Down Program helps first-time homebuyers in the counties most affected by the recent foreclosure crisis. Through this program, buyers receive down payment assistance in the form of a second mortgage. As long as you live in the house full-time for five years, the assistance is forgiven. If you sell, refinance or no longer use the property as your primary residence, you’ll need to repay part of the loan.

The First Down Program offers buyers

  • A forgivable down payment assistance loan of $7,500.

Requirements

To be eligible for this down payment assistance program, first-time buyers must

  • Treat the home as their primary residence.
  • Purchase a home that costs no more than $454,250.
  • Be buying a one-to-four-unit home or condo.
  • Live in Cranston, Pawtucket, Providence, Warwick or Woonsocket counties.
  • Have income of less than $93,623 for a one- or two-person household, or less than $107,667 for a household with three or more people.

How to apply

Funds for this program are limited. Reach out to Rhode Island Housing’s Loan Center or a participating lender to get started.

Learn more

National first-time homebuyer programs

Rhode Island offers several helpful programs for first-time homebuyers, but buyers in the state should consider looking to nationwide programs, too. These programs can help you find an affordable mortgage, down payment and closing cost assistance, and federal tax credits.

LendingTree’s guide to first-time homebuyer programs can help you find the solution that works best for you.

This article contains links to LendingTree, our parent company.  The information in this article is accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jamie Wiebe
Jamie Wiebe |

Jamie Wiebe is a writer at MagnifyMoney. You can email Jamie here

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