During the COVID-19 pandemic, housing costs – and demand for those houses – skyrocketed all across the country while inventory has bottomed out. Historically low interest rates made mortgages – even for homes that would have been far too expensive mere months ago – incredibly attractive. Faced with a limited housing supply but buoyed by favorable rates, buyers competed against each other. They waived contingencies and hiked up bids to win their dream homes – often without doing their due diligence. Unfortunately, this new crop of homeowners has regrets. According to Lorie Konish in a recent article for CNBC, “72% of recent homebuyers have regrets about their purchases.” A significant share of new homeowners felt they either rushed into buying a new home, overpaid or waived important contingencies designed to protect buyers. Referencing another survey, Konish notes that 77% of homeowners “had to pay for an unexpected repair within the first year of owning a house.” If you plan to buy a house in the near future, you probably have a million questions. In this post, we learn what homeowners wish they knew before buying. From seller disclosure laws to finding better loan terms, here are twenty things home buyers wish they knew before starting the home buying process.
20 Things Homeowners Wish They Knew Before Buying a House
#1 If the House Had Access to High-Speed Broadband Internet
First on our list of what homeowners wish they knew before buying a house is if that house had access to high-speed broadband internet. A 2020 Gallup survey found that “about half of Americans (48%)…would choose a town (17%) or rural area (31%) rather than a city or suburb” if they were able to live anywhere they wanted. This represents a 9% increase from Gallup’s 2018 survey, in which only “39% thought a town or rural area would be ideal.” Over the last two years, remote work has pushed some of us towards rural communities and suburban neighborhoods. Unfortunately, high-speed internet is less readily available in rural areas of the US.
In an article for The New York Times, Ben Casselman notes “broadband internet service” is the first infrastructure issue many residents point to. Quoting President Biden, Casselman writes that “35 percent of rural America that still doesn’t have…high-speed internet.” Communities that do have access to high-speed internet have fewer options when parsing through providers. That lack of competition can lead to price hikes — both in monthly service fees and the initial cost of building out infrastructure.
During the pandemic, buyers leapt at the opportunity to close on homes with large lots in beautiful neighborhoods. Few stopped to think about internet access. According to Rob Pegoraro in an article for The Washington Post, some learned “that their property [was] bereft of broadband” long after closing. For remote workers, this meant paying “tens of thousands of dollars” to extend physical infrastructure, “or limping along with expensive, data-capped satellite Internet.” Faced with these unforeseen costs, many rural homeowners wish they had checked internet access and potential upgrades before buying their “dream house.”
#2 That Their Home Was at Flood or Wildfire Risk
Our search for what homeowners wish they knew before buying turned up dozens of tweets about disaster risk. Back in 2018, NRDC attorney Joel Scata tweeted that “home buyers should have a right to know a property’s flood risk.” However, “disclosure requirements often are not sufficient.” If homeowners had known about the risk they faced when buying properties in hazard zones, they probably would not have moved.
According to the First Street Foundation Risk Factor tool, “there is no federal requirement for home sellers to disclose…a property’s flood risk.” Certain states do require sellers, agents and/or lenders to disclose disaster risk. For example, California requires sellers to inform prospective buyers if their property is in a high or very high fire risk zone. This law went into effect in January 2021 and only applies to houses built prior to 2010. Disaster risk disclosure laws vary from state to state, often placing the onus on buyers.
#3 That the Seller Isn’t Always Legally Required to Disclose Prior Damage, Additions or Repairs
In addition to disaster risk, the First Street Foundation resource notes that sellers are not required by federal law to disclose “previous flood damage.” When it comes to prior damage, additions or repairs, the entire process of due diligence is often up to the buyer. For example, sellers in Massachusetts benefit from the “caveat emptor” rule. “Caveat emptor” is Latin for “let the buyer beware.” This rule means that the seller is not required to provide a disclosure of defects to their own home.
Instead, it is the buyer’s job to uncover any issues with the property before purchasing the property. According to “Selling a Massachusetts Home” from NOLO, sellers need only disclose “the existence of lead paint…and the presence of a septic system.” Any other issues are the buyer’s responsibility to uncover through a home inspection and/or title inspection. Of all the surprises that pop up during the homebuying process, this is perhaps most shocking.
#4 That They Might Have Qualified for Closing Cost or Down Payment Assistance When Buying Their First House
Next in “what every first time homebuyer wishes they knew” is that certain home buyers qualify for down payment assistance and closing costs assistance. Few buyers purchase a new house with all cash. Most apply for a mortgage. This means they then owe a down payment and a wider array of closing costs than those who pay all-cash. If you are unfamiliar with down payments and closing costs, here’s a brief introduction.
Down Payment
A down payment is a percentage of a home’s purchase price owed by the borrower at closing. How much a borrower must put down depends on their credit score, DTI ratio and the type of mortgage for which they apply. VA loans, FHA loans and USDA loans accept lower down payment amounts. Some borrowers are allowed to submit a down payment between 0% and 3.5% of the purchase price. Those who apply for conventional loans are usually required to put more money down.
Closing Costs
In most states, closing costs are typically between 2 and 6% of the buyer’s loan balance. Most of the closing costs owed by buyers are related to their mortgage. Lenders usually require applicants to pay for a title search, home inspection and appraisal. These fees are generally due at closing. Other costs paid by the buyer include origination, real estate attorney and recording fees, insurance premiums, taxes and the first monthly mortgage payment.
In some cases, borrowers can wrap their closing costs into their mortgage. This allows buyers to save money at closing, instead paying a bit of their closing costs in each monthly payment. Others can cut their closing cost bill by applying for assistance from grant programs.
Eligibility for CCA and DPA Programs
But who qualifies for down payment and closing cost assistance? According to this FDIC resource, most programs are “targeted toward specific populations, such as first-time homebuyers, active military personnel and veterans, or teachers.” However, some CCA and DPA programs “offer assistance for any homebuyer who meets the income and purchase price limitations of their programs.”
The type of CCA or DPA program available to homebuyers differs from state to state. However, “forgivable grants; zero interest, deferred payment second mortgages; and full interest, fully amortizing second loans” are all common. Eligibility also differs from state to state and program to program. In most cases, eligibility is limited by the buyer’s income. It is also limited by the median home price in their area and by applicants plan to use the property. DPA and CCA programs typically require buyers to live in the home they purchase. They are not allowed to rent out the home or use it as a vacation property. Some grants are only available to those buying their first home.
The amount a buyer owes at closing can come as quite a shock. Some simply do not have enough money to cover a 20% down payment and thousands in closing costs. Choosing the right mortgage and applying for closing cost and down payment assistance can dramatically reduce the amount you owe at closing.
#5 What Inspectors Don’t Check
Another frequent complaint issued by new homeowners is that their inspector either glossed over or entirely missed a major problem with the house. We have all heard horror stories about a leak in the roof, an ancient electrical system or foundation issues that cost buyers thousands. Most lenders require borrowers to commission a home inspection before agreeing to issue a loan for the property they wish to buy. Inspections typically cost several hundred dollars and last a few hours. Buyers assume inspectors carefully check for everything from pest infestations and foundation issues to water damage and plumbing problems.
However, inspectors only report on what they can readily see. This means the scope of a typical home inspection is fairly limited. According to this resource from the CREIA, an inspector will “report [on] the condition of the structure, roof and foundation.” They will also check “drainage, plumbing, [HVAC] system, visible insulation, walls, windows, and doors.” Inspectors only include “items that are visible and accessible by normal means” in their reports. They will not investigate issues that lurk beneath the surface.
Given this, the average inspector will not investigate or report on the interior of the home’s HVAC, plumbing/septic system or electrical systems. Neither will they hop up on the roof to assess its integrity. In a Coldwell Banker blog post, Lindsay Listanski notes the average inspector rarely checks for pests, test for toxic chemicals or assess plumbing issues. Examining “landscaping conditions” and testing appliances is also unusual in a run-of-the-mill home inspection. If you suspect hidden problems — i.e. pest infestations, electrical issues or toxic chemicals — you might need to hire someone who specializes in those issues.
#6 That What Your Lender or Real Estate Agent Says You Can Afford Isn’t Necessarily What You Can Actually Afford
As one commenter noted in a home buying regrets Reddit thread, “just because the bank says I can afford it, doesn’t mean I can.” When you apply for a mortgage, the lender will determine how much money and under which terms they are willing to lend. The size and terms of the loan for which you qualify are based on your credit score, net worth and debt-to-income ratio. If you qualify for more than you plan to spend, stick to your original budget.
Borrowers considering an adjustable rate mortgage (ARM) instead of a fixed rate mortgage should be especially careful. Their monthly mortgage payment could skyrocket when interest rates increase. Even with a fixed rate mortgage, monthly payment amounts are subject to change. If your homeowners insurance premium or property taxes go up, your monthly payment will too. Before accepting a loan for the most expensive home they qualify for, each borrower should consider how their income and expenses might change.
#7 The Cost of Maintenance
As the saying goes, “owning a home is more expensive than buying a home.” Of all the things homeowners wish they knew before buying a house, the cost of maintenance is mentioned again and again. How much time it takes to maintain a home also pops up frequently in forums. Buyers often refer to the time and money it takes to maintain a property as “the hidden costs” of homeownership. In an article for The Ascent, Maurie Backman writes that annual home maintenance costs typically “amount to 1% to 4% of [the] home’s value.”
Back in July, the median price for a single family home in the US was $428,700 USD. A homeowner with a house worth $428,700 should expect to pay between $4,287 and $17,148 to maintain their property each year. The first year of ownership can be one of the most expensive as it involves a number of “start-up” costs. Buying equipment like a lawn mower or weed whacker, for example, can cost anywhere from $500 to $2,500 alone. Other issues like a dead appliance, crack in the foundation or leak in the basement can easily overwhelm a homeowner’s maintenance and repair budget. Yard maintenance and home repairs can also eat up an owner’s free time.
#8 That Drainage Issues Are Dangerous and Expensive to Fix
When house hunting, buyers often dismiss a small area of standing water near the back door or a puddle in the backyard. However, drainage issues are nothing to ignore. They can lead to flooding, water damage, mold, erosion and many other expensive problems that endanger homeowners and their properties.
Mark Shrayber details homeowner Holly D. Johnson’s experience in this article for Yahoo! Entertainment. When Johnson bought her first house in 2007, she ignored standing water after her realtor dismissed it as “‘no big deal.'” Months later, Johnson and her family were on the hook for a new drain and sump pump. The experience was “‘very expensive'” for Johnson’s family. She would have avoided the home had she known what a “‘huge red flag water issues can be.'”
#9 What Development Was Planned for the Area
All house hunters know that the neighborhood in which they choose to buy a home matters. It impacts the livability and value of a house. However, few buyers consider how that neighborhood will change over time. In this Reddit thread about what homeowners wish they knew before buying, many homeowners expressed regret over failing to investigate upcoming development. Some also mentioned local zoning laws, which could prohibit homeowners from building ADUs.
One homeowner almost purchased a property “close to railroad tracks” because their realtor promised that the tracks were “seldom used.” After visiting their local planning department to take a look at “zoning codes, ownership of empty parcels surrounding the house…[and] plans for development in the area,” the buyer rejected that property. A few years later, “a commuter rail station was built” right by the house.
#10 That You Don’t Have to Put 20% Down During the Home Buying Process
Another common misconception among first-time buyers is that they must put down 20% at closing — even if it means spending all their savings. In reality, the average down payment is somewhere between 6 and 12% of the borrower’s loan value. Government-insured mortgages like FHA, VA and USDA loans have the leanest down payment requirements. Some borrowers can put down 0%, while others can put down as little as 3.5 or 5% of their loan value.
Of course, if you put less than 20% down, you will need to pay for private mortgage insurance. Adding PMI to your monthly mortgage payment is often far more manageable than saving an extra $10k for a 20% down payment.
#11 The Importance of School District Boundaries
The importance of school district boundaries is another thing homeowners wish they knew before buying. Parents with young children are not the only house hunters who should try to buy in a good school district. The school district in which your property falls can affect your home’s value. It can also impact much time your home spends on the market after you list it for sale.
According to this Trulia blog post, “homes in better school districts usually hold their value more than homes in lower-quality school districts.” Even in “tougher economic times that trigger declines in home values,” homes in good school districts typically retain their value. Writing for Yahoo!, Casey Bond notes that “homes in higher-rated public school districts are, on average, 49% more expensive than the national median.”
Of course, buying a house in a high-quality school district can also mean higher property taxes for homeowners. Still, retaining the value of your property during turbulent times might be worth the bigger tax bill.
#12 What Standard Homeowner’s Insurance Doesn’t Cover
Another unwelcome surprise is the long list of issues a standard homeowner’s insurance policy does not cover. One commenter in this Reddit thread bemoans the fact that their homeowner’s insurance policy provided no coverage for essential features. Their policy did not cover “retaining walls, fences [and] sewer lines outside the foundation of the house.” A standard homeowner’s insurance policy will usually cover damage caused by internal mechanisms like your home’s appliances, plumbing or electrical system. It might also cover vandalism of an occupied home, damage to or theft of your personal possessions. Some personal liability insurance is also wrapped into most homeowner’s insurance policies.
In an article for US News, Jim Travers identifies everything that a standard homeowner’s insurance policy does not cover. According to Travers, mold and water damage, roof leaks and replacements, plumbing issues, tree removal, HVAC system repairs and foundation repairs are sometimes covered. If damage to your home’s roof, plumbing, foundation, landscaping or interior was caused by a storm or intruder, it might be covered.
Homeowner’s insurance rarely covers damage or loss from disasters like floods, earthquakes and wildfires. Additional insurance is required. Any damage to your property that was caused by “neglect, lack of maintenance or faulty construction is not covered.” This includes damage caused by a prior owner who neglected the property or made mistakes when conducting repairs.
#13 How Accessible or Inaccessible the Home Would Be for Seniors and People With Disabilities
Most homeowners hope to age in place — either on their own or with family. According to the Pew Research Center, 18% of US residents now live in multigenerational households — compared to just 7% back in 1971. As of last March, “there were 59.7 million U.S. residents who lived with multiple generations under one roof.”
A significant share of Americans are disabled and will need some sort of accommodations to continue living independently and comfortably at home. According to the CDC, 61 million American adults live with a disability and one in seven have a mobility disability. Disabilities that affect vision, hearing and cognition are also common.
Despite these statistics, few homeowners consider the accessibility of their property unless they live with a disability or care for an elderly relative. They do not check the wideness of doorways, the height of cabinets, the darkness of hallways or the number of stairs. However, most of us can become injured, fall ill or experience the effects of aging. As such, homeowners in this Reddit thread recommend buyers “consider accessibility” before submitting an offer.
#14 That They Might Have to Hire a Real Estate Attorney
Some states and counties require one or both parties in a real estate transaction to hire an attorney. For example, Massachusetts home buyers are required to work with a real estate attorney. This is because the state considers This is because processing real estate transactions is considered practicing law in Massachusetts. Only attorneys are permitted to practice law in the state.
#15 To Read CCR’s and HOA Rules Very Carefully
According to this article from REALTOR Magazine, “73.9 million Americans reside in a community with a homeowners association or condominium board.” While some enjoy the structure and safety an HOA provides, others struggle to follow the rules and prefer a bit more freedom.
Several commenters in this Reddit thread about “things you wish you knew before you bought your first house” mentioned CCR’s and HOAs. One commenter noted they “got a hard lesson the first HOA [they] moved into.” That commenter recommends “reading the CCR’s and [making sure you] can live with them before you buy.”
#16 That They Could Have Shopped Around for Better Loan Terms
No matter who you bank with, no buyer is required to choose the first loan offered to them. Instead, homeowners can shop around for lower fees, a lower interest rate and better loan terms. In an article for Bankrate, Zach Wichter notes that a significant share of borrowers save when they shop around. According to data from a 2018 Freddie Mac study, borrowers who got a second quote saved an average $1,435 on their $250k loan.
Referencing the same study, Wichter writes that “80% of those borrowers saved between $966 and $2,086 by shopping around with one additional lender.” With every additional quote, savings increased. Borrowers who received four quotes saved an average $2,578 and those who received five quotes saved $2,914 on average.
#17 That Property Taxes Change Over Time
Homeowners who opt for a fixed rate mortgage assume their monthly payments will never change. However, your monthly payments actually contain four separate elements: a percentage of the loan principal, interest on the amount you owe, insurance and taxes. While your mortgage payment will stay the same, your insurance premiums and tax bills could increase.
The amount you owe in property taxes depends on the location of your home and the property’s assessed value. Given this, your property tax bill could increase if you make updates that boost the value of your home. In an article for Rocket Mortgage, Victoria Slater writes that a healthy economy can also boost home values and consequently increase taxes. Local ordinances and changes to state law can also impact your tax bill. This is why many homeowners wish they checked with their local assessor’s office before buying or remodeling.
#18 That the Seller Pays Realtor Commissions
According to Michele Lerner in an article for The Washington Post, 88% of buyers hire a real estate agent. Realtors have access to the MLS, which can provide buyers with more information about homes on the market. They can also negotiate on the buyer’s behalf. This could result in a lower the purchase price or get the seller to pay for repairs.
Still, some buyers try to find their dream home without the help of a real estate agent. They assume hiring an agent will cost more than it’s worth. What homeowners who did not work with a realtor wish they knew is that the seller typically pays both realtor commissions.
#19 Utilities Tend to Be More Expensive When Owning than Renting
In the Reddit thread “Things you wish you knew when buying a house,” several commenters mentioned the high cost of utilities. Having rented in the past, many new homeowners are shocked by the cost of water, electricity, gas, internet and even trash pickup!
#20 That It’s a Lot Harder to Get a Mortgage When Self-Employed
Last on our list of things I wish I knew before buying a house is how difficult qualifying for a mortgage is when self-employed. This post from the Torii blog notes that “lenders scrutinize self-employed applicants” because they are considered “higher-risk.” Self-employed applicants must meet each lender’s minimum DTI ratios. They must provide evidence of reliable monthly income. Both can be difficult for business owners.
One issue business owners often encounter when applying for a mortgage is that their net income is far too low. Business owners are eligible for a number of tax deductions for which employed people do not qualify. When entrepreneurs claim too many deductions on their taxes, it sinks their taxable income. Unfortunately, net income is what lenders look at when deciding whether to issue a loan. While their gross income might have surpassed the lender’s requirement, their net income might not meet the minimum.
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