First-time homebuyers say their biggest regret after buying a home is not getting better information about the total cost of homeownership, according to market research firm J.D. Power.
“When we do some research around regrets … the biggest gap right now is information on homeownership costs,” said Bruce Gehrke, director of lending intelligence at J.D. Power, during a conference hosted by HousingWire in Colorado Springs, CO, on Monday.
“For younger borrowers, it’s a lot higher than what they expected. They just did not expect all the things that are involved in owning a home—and it’s insurance, it’s maintenance, it’s everything else that comes along with it,” said Gehrke.
Most homeowners are well-versed in calculating monthly mortgage payments, using the size of the loan and the expected interest rate to budget for payments.
But some first-time buyers in particular are caught off guard by the “hidden” costs of owning a home, including taxes, maintenance, and insurance.
(Realtor.com/Keith Griffith)
The hidden costs of owning and maintaining a single-family home in the U.S. now average more than $18,000 each year, according to a 2024 study from Bankrate.
That’s a 26% gain from four years earlier, an increase driven by soaring home values, inflation for maintenance costs, and rising insurance premiums.
At Monday’s event, Gehrke also shared recent survey data showing that 43% of mortgage borrowers interacted with a lender before looking for a home, a share that is up roughly 20% from two years earlier.
In an environment of persistently elevated mortgage rates and tighter lending standards, cost-sensitive buyers might want to find out exactly what kind of a rate they qualify for and adjust their purchase budget accordingly before launching their search.
Surprisingly, Gehrke said survey data showed that mortgage borrowers report higher satisfaction and less likelihood to shop around among different lenders than they did a few years ago.
“We’re also seeing a lot less tendency toward shopping for a second lender, comparing rates, even going as far as submitting a second application—those numbers are down dramatically,” he said.
A recent study by the Realtor.com® economic research team found that getting quotes from multiple lenders saves borrowers an average of 0.86 percentage points on their mortgage rates.
Gehrke suggested that because more prospective homebuyers are contacting lenders as the first step of their homebuying process, lenders who offer a superior experience might be able to lock up customers quickly before they shop around for lower rates.
“The biggest friction point that we see in first-time homebuyers is simply transparency, knowing what’s coming, knowing what’s coming next in the process, not being surprised by things,” he said.
