Trials, Tribulations and Regrets of Buying a Home

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For many Americans, buying a house is the most complicated financial transaction they’ll ever undertake. There are literally dozens of issues to keep in mind when embarking on a home purchase, and keeping them in mind as the process moves ahead can make the difference between being satisfied with the home or developing a serious case of buyer’s remorse.

Buyers are in fact buying two things: a home and a mortgage. Finding a house to buy presents its own problems, but securing a mortgage may be more stressful, particularly if a buyer is rejected by a lender.

The good news is that only about 6% of home buyers are rejected for mortgage loans, so the odds are definitely in your favor. Still, even if you succeed in finding the home you want and getting the mortgage to help you pay for it, about half of new homeowners discover at least one thing they would have done differently in the home-buying process.

Researchers at NerdWallet surveyed more than 2,200 U.S. adults, of whom about 1,300 had applied for a mortgage and more than 1,400 were homeowners, to try to find out how they felt about the home-buying process. Here are some of their key findings:

41% of Americans who have applied for a mortgage felt they were not aware of all of their loan options during the lending process.

Among mortgage applicants, 28% said they felt they weren’t a priority to their mortgage professional during the loan process.

6% of mortgage applicants reported that they had been denied a mortgage. Of those who have been denied[2], more than half (52%) said they had a high debt-to-income ratio, 39% said they had issues with credit history or score, and 25% said they had insufficient income.

Many American homeowners said the home-buying process was: stressful (42%), complicated (32%) and intimidating (21%), yet 41% said it was manageable and 30% even said it was rewarding.

If they were to go through the home-buying process again, nearly half of American homeowners (49%) would do something differently.

The NerdWallet study also found differences among baby boomers, Gen-Xers and millennials who had purchased homes. Among millennials, for example, 65% of respondents had never applied for a mortgage, compared with just 43% of Gen-Xers and 26% of boomers.

Mortgage approval rates were nearly identical for Gen-Xers and millennials: 91% for the former and 89% for the latter. Boomers had a 98% success rate.

And what about buyer remorse? Nearly half of all homeowners reported that they would have done something differently during the home-buying process. Among millennials, 19% said they wished they had bought a bigger house and 10% thought they should have waited longer before making the plunge. What millennials said they would do differently: 28% would save more money before buying a house, 15% would do more research on the process, 14% would spend more effort getting their documentation organized and 12% would spend more time researching the mortgage-lending process.

Among Gen-Xers, 20% wished they had purchased a bigger home, 27% said they would have saved more money before buying, 19% said they’d have spent more time learning about mortgage-lending, and 18% said they’d have shopped around more for a mortgage.

More than half of boomers (56%) said they wouldn’t have done anything differently.

Even being denied a mortgage can be a positive experience, however. More than a third (35%) of applicants who had been denied a mortgage said the result encouraged them to get their finances in order. The top three reasons for denials: debt-to-income ratio was too high (52%), insufficient credit history or credit score (39%) and insufficient income (25%).

The full NerdWallet report is available at the company’s website.