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15 Myths About Being a Homeowner

By Jeremy Bowman - Sep 16, 2022 at 10:10AM
Two people standing outside a house with their arms around each other.

15 Myths About Being a Homeowner

To own or not to own

Deciding whether to own or rent your home isn't easy. There are pros and cons to both and financial and lifestyle implications for each side.

If you've never owned a home, you may have heard several myths about the advantages or disadvantages of being a homeowner. While the experience isn't the same for everyone, there are some things that often get exaggerated.

Keep reading for 15 myths you should know about being a homeowner.

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Person standing in front of For Rent sign in front of house.

1. It's a better financial move than renting

Owning a home can certainly be a lucrative financial decision, especially over the long term, but it doesn't necessarily beat renting.

So which is the best money move? Well, it depends. If you sell the house in only a few years, much of your would-be gains will have gone to closing costs and real estate commissions. Alternatively, if the stock market soars, you might have been better off investing in stocks than real estate as stocks usually produce higher returns.

While investing in a home generally pays off over the long term, there's no absolute rule that it beats renting.

ALSO READ: Should You Rent or Buy a Home? 3 Charts To Help You Decide

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Person sitting in a coffeeshop and looking at laptop.

2. It's a can't-lose investment

If you own a home, there's a good chance it will appreciate in value. But that's not an ironclad rule, especially not now.

Housing economists are calling for prices to pull back in a number of metro areas that experienced booms during the pandemic. So if you buy in those areas, you should be prepared for the possibility of prices declining.

Houses also require maintenance. Something like a radiator leak, faulty roof, or flooded basement could cost you tens of thousands of dollars, wiping out any gains you would have made.

And if your neighborhood becomes less desirable, your home value could be at risk, too. Though most houses do gain value, it's a good idea to understand the exceptions before you buy.

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Two stressed out people looking over papers at a renovation site.

3. Home renovations are easy to do

Home improvement shows like those on HGTV might give you the impression that home renovations are simple -- after all, they can remodel whole kitchens in just 30 minutes on those shows.

However, in real life, home renovations are time-consuming, expensive, and involve a lot of decision-making. What's more, in much of the country nowadays, finding someone to do the work is difficult.

If you're buying a fixer-upper, keep in mind that a renovation will be costly in terms of time and money.

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Person tiling a floor in a home bathroom.

4. Renovations will pay for themselves

Once again, if most of your perception of homeownership comes from HGTV or tales of home-flipping, you may be under the impression that any renovation will pay off once you sell the home.

However, that's generally not true. In fact, renovations often don't add enough value to recoup their expenses. For example, a typical kitchen renovation will raise your home's value by only 71% of what you spent on it.

Even if you like the remodel, a prospective buyer may not, potentially costing you a sale.

ALSO READ: Think These Renovations Improve Your Home's Value? You're Dead Wrong

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Sack with the words Down Payment written on it and surrounded by coins.

5. You need to put 20% down

Though banks typically prefer a 20% down payment on a mortgage, most Americans don't do that. The average down payment in the U.S. is actually just 6%, according to Rocket Mortgage.

You'll usually have to pay extra for private mortgage insurance (PMI), but if you don't have enough to put 20% down, you shouldn't let that stop you from buying a home.

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Person working on paperwork at kitchen counter.

6. Your mortgage payment is the same as your monthly costs

It's easy to compare mortgage payments and rents, and you might even find that a mortgage payment is cheaper than paying rent.

However, as a homeowner, your monthly costs will go beyond your mortgage payment. First, you'll owe utilities that you wouldn't typically have as a renter, like heat and water, and additional maintenance expenses such as landscaping. Even if you choose to do those yourself, you should factor the time cost into your comparison.

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A hand with a hammer about to hit and break a piggy bank.

7. You should borrow as much as the bank will lend

Lenders will approve prospective homebuyers to borrow a certain amount of money for a purchase.

Borrowing that amount is easy, but just because you can doesn't mean you should. The bank doesn't know all your expenses or what you're planning to spend money on. It's in their interest to lend as much as possible -- as long as the loan is repaid. Borrow according to your own financial and housing needs. Remember that what you borrow from the bank must be paid back.

ALSO READ: How Much House Can I Afford?

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Luxurious modern-looking house with swimming pool.

8. You should buy as much house as you can

While most Americans generally want more space in their homes, you could regret having too much home. Bigger homes cost more to heat and cool, and you'll be responsible for maintaining that extra space. In other words, the bigger the house, the bigger the risk of something going wrong.

There's nothing wrong with buying a big house, but make sure you're buying it because you need it, not just because you can borrow enough to buy it.

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Person doing maintenance on a washing machine.

9. You can do what you want with your home

If you're planning a home addition or similar project, you might have to check with your local planning board or authority to determine whether any permits are necessary.

Though owning a home gives you more freedom than renting, there are still restrictions on what you can do with your home. Similarly, if you live in a neighborhood with an HOA, you may be required to mow your lawn, or they could have restrictions on something like having a gas grill.

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Person fixing a window.

10. Maintenance costs are minimal

You're responsible for your home's condition, and you want to make sure it not only retains but also grows its value.

So you'll have to make sure you maintain the home. It's easy to overlook this cost when shopping for a home because maintenance expense doesn't show up anywhere if you're buying a single-family home.

But costs for repairs, checkups, and outdoor work like landscaping add up. It's best not to ignore maintenance when considering buying a home.

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Home contractor talking with homeowner.

11. It's easy to hire people to do everything

You don't need to do everything yourself when you own a home. Typically, you can hire someone to do almost any type of improvement or repair.

However, the national economy is currently rife with labor shortages, so you may have to wait longer or pay more for a typical project. Alternatively, you may find someone who will do the work but does it poorly or overcharges you.

If you're planning to work on a home you're buying, it's a good idea to research the price and timeline involved first.

ALSO READ: Hire Trustworthy Home Help

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The words Home Mortgage Refinance typed across the top of paperwork.

12. You can always refinance down the road

With mortgage rates approaching 6%, you might think that if you buy a home now, you'll be able to refinance at a lower rate. While that might be true, no one knows where mortgage rates are headed -- they could go higher.

Similarly, your financial situation could worsen if you lose your job or some of your income or take on more debt. Such events could make it more difficult to refinance your mortgage down the road.

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A person wearing a suit and giving a thumbs down.

13. It's a bad time to buy

No matter the economic climate, it's easy to get jitters about buying a home. It's an expensive purchase and a financial and lifestyle commitment. But like timing the stock market, it's impossible to time the real estate market. And it's not a good idea to try.

The best time to buy a home is when the time is right for you. If you feel settled in your job and expect to be in the same place for at least five years, it's probably a good time for you to buy a home.

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A mortgage payment marked in blue on a large calendar page.

14. You should get a 30-year mortgage

While the 30-year fixed-rate mortgage is the most popular in the U.S., it's not right for everybody.

If you can afford higher monthly payments, you may want to consider a shorter-term mortgage, like the 15-year fixed, which will give you a lower interest rate.

If you think you might not stay in your home long, an adjustable-rate mortgage (ARM) may be right. Those typically offer lower interest rates up front before the rate floats. Like most of these decisions, the correct answer is that it depends on your circumstances.

ALSO READ: How To Invest in Real Estate

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Image of a home inspection report.

15. You'll catch every problem ahead of time

Even with a professional home inspection, you're bound to miss some issues with a home during due diligence. They could be out of view because of landscaping or the seller's furniture. There could be a rodent problem that's not visible. Or something faulty could break soon after moving in.

Every home will have some kind of problem eventually, so it's best to have an emergency fund to cover any repairs -- and to understand that maintenance and repairs are part of being a homeowner.

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Two adults and a child under a tiny roof in a home.

Make the best decision for you

Buying a home could be the biggest financial decision of your life, and for many homeowners, it's a lucrative one. However, it's not the right decision for everyone.

The best way to do it is to buy when the time is right for you, at a price that is reasonable, and with a monthly payment that you can manage. If you plan to stay in the home for five years or more, buying a home will likely be a good decision for you.

The Motley Fool has a disclosure policy.

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