Everyone who's not a starfish living under a rock is likely aware of recent mortgage rate hikes. The median monthly payment on a new mortgage has doubled from $1,500 to $3,000 since January 2021, according to data from The Kobeissi Letter.
In other words, home buyers who snagged homes during those days of low rates got good deals. Sometimes. Maybe. Actually, that's up for debate. My friends bought a home at a 2.75% mortgage rate, a steal, and they totally regret it -- for good reason.
Folks who snagged houses back when they were dropping like it's hot might be stuck holding gift-wrapped bombshells. Between taxes and unpleasant neighbors, there are plenty of reasons to have buyer's remorse. Here are four reasons my friends regret buying a house despite low rates.
1. Maintenance and property taxes
The average American household spends 29% of its income on housing. But it's more than mortgage fees; it's also maintenance. According to the Angi State of Home Spending report, the typical cost of maintaining a home is $2,467 per year, having jumped 162% from 2019 to 2022.
Another expense many new homeowners forget to consider is property taxes. The typical homeowner pays up to 2.23% of their home value in taxes (in most cases, property taxes are less than 2%). That's thousands of dollars yearly in lifetime expenses -- even when you pay off your mortgage, taxes remain.
My friends didn't expect the maintenance costs -- everything from roof repairs to gutter cleaning -- to be so high. Nor do they enjoy property taxes, something every homeowner deals with.
More: Check out our picks for the best mortgage lenders
2. Zero flexibility
Planting roots is a beautiful thing when you don't want to wander. Otherwise, it's a trap. A home is one of the deepest, hardiest roots of all. Once you buy one, you lock up thousands of dollars that can only be recouped once the home sells. In other words, you're stuck fast.
Renting is better than owning for exploring new neighborhoods. My friends found that out the hard way. They've sacrificed flexibility for stability; like many, they regret it. I, too, have rented my whole life. It's something to consider before I become a first-time home buyer.
3. Noisy neighbors
Day after Fourth of July. Three in the morning. BA-BOOM. Heart pounding, eyes snapping open, I check the window to see...what else but fireworks, launched by the noisiest neighbors this side of Los Angeles County? Bye-bye, sleep. Bye-bye, sweet silence, my dear old friend.
Neighbors can make or break a good living experience. Noisy ones can even impact the value of your home by becoming part of the landscape, like weeds. Can't remove them; can't escape them. My sympathy goes out to my friends, who are trapped with rude neighbors.
4. No way to sell
Buying a home at a low 2.75% rate is fantastic by today's standards. But when you experience buyer's regret and want to sell, you have to deal with current mortgage rates, which are closer to 7%. You might feel stuck if you can't afford to cough up the cash for an outright purchase.
My friends sure do. They thought moving at low rates would be possible -- but that ship may have sailed. From the first quarter of 2020 to the fourth quarter of 2022, the median home sales price rose 46% from $329,000 to $479,500, according to The Ascent's housing research.
Do they sell and move to a better location at more than twice the rates? Do they stay where they are and tough out high costs, noisy neighbors, and buyer's remorse? My friends aren't sure what to do; if they sell, they might even return to renting for the foreseeable future.
How to handle feeling stuck with your home purchase
No two ways about it -- getting stuck in a bad housing situation is brutal. It's reasonable to regret buying a home, no matter the rates. Often, the solution to reducing costs is to refinance the home. But with rates so high, there are probably better alternatives.
Renting out property is a way to maintain homeownership, reduce net expenses, and regain some flexibility of living. There are pros and cons to renting part of your home. Not everyone can, and it takes work, but even so, some homeowners may find it worthwhile.
Selling your home and taking out a loan to buy a new one is an option, albeit not a great one. Even the best mortgage lenders are affected by economic conditions, so monthly payments are higher than you might expect.
I'd consider consulting with a financial advisor or home planner before deciding how to sell, buy, or refinish a home. It's not cheap, but it's better than losing thousands to subpar mortgage decisions I can't take back. You can even find good financial advisors who charge by the hour.
Bottom line
The takeaway here is to consider more than mortgage payments when you buy a house. Factors like lifestyle changes and the cost of home maintenance can reduce your quality of life. My friends are just two of the many Americans who might feel stuck in a new home until mortgage rates fall.
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