This Is My Biggest Financial Regret in Years

When the pandemic first hit, I had just sold my home and I was interested in buying a new house. But, there weren't many homes for sale in my target area, and I had another place to live, so I wasn't in any big rush.

Unfortunately, putting off the purchase of a property turned out to be one of my biggest financial regrets in years. Here's why I wish I had acted sooner -- along with some tips on how you can avoid ending up with regrets.

Buying a house sooner would have saved me a ton of money on mortgage payments

There's a simple reason why not moving forward to purchase a home ASAP during the pandemic is one of my biggest regrets.

During COVID-19, mortgage rates repeatedly hit record lows. It was possible to get a 30-year mortgage below 3%. It is not possible to do that anymore, to put it mildly. As of the week of Dec. 14, 2023, the average rate on a 30-year fixed-rate mortgage is 6.95%. And that's actually lower than it has been, as rates were as high as 7.79% recently.

The difference between a 3% rate and a 6.95% rate is significant. For each $100,000 borrowed at 3% on a 30-year fixed-rate mortgage, the monthly payment would be $421.60. But each $100,000 borrowed at 6.95% on a 30-year fixed-rate mortgage comes with a monthly principal and interest payment of $661.95.

So it's pretty easy to see why I regret not buying a home when rates were a lot lower. Especially since property values haven't fallen since the pandemic in the area where I'm buying a home. I'll be paying around what I would have paid to buy a house but my mortgage for it will be much higher.

How can you avoid making the same mistake I did?

The reality is, I knew mortgage rates were not going to stay as low as they were forever -- but I assumed they would only go up a reasonable amount since rates have been hovering around or below about 4% for many years.

Unfortunately, I underestimated how high they could go because I was acting based only on my narrow experience of what rates were like the last time I bought a home. Even though I write about mortgage rates every day, and even though I knew the low rates of recent years were not the way things had always been, I still fell into the trap of believing that rates would stay in the range they had fallen into during most of my adult life.

I had false confidence that I'd be able to get an affordable loan like I had in the past. So I decided I'd rather wait until I had more choices of homes on the market rather than buy in a time of lower inventory -- even though doing so meant passing up a great rate from a mortgage lender. Now, though, I need to buy a house and inventory isn't all that much better and rates are a lot worse. So, needless to say, my decision wasn't a great one.

You can avoid regrets like mine by focusing on these points:

• First, remember that buying a home is also a financial choice along with a lifestyle one. So try to take advantage of the chance to lock in a great rate when you can, even if that may mean you can't buy the absolute perfect house.
• Second, take the time to educate yourself about trends in both the housing and mortgage markets when you decide if it's the right time to buy, and don't fall into the trap of treating recent trends like they'll be the status quo forever.

I'm hoping rates come down soon, and I'm still buying a home with the goal of refinancing my home loan when they do. But I don't really believe I'll see a 3% 30-year fixed-rate mortgage anytime soon, so I'm likely to regret my choice to delay for a long time to come.