by Maurie Backman | Published on Sept. 23, 2021
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Homeownership may not be the experience you expect it to be.
You'll often hear that owning a home could be the ticket to more financial stability. And there may be some truth to that.
When you own a home, you get to stay in that home as long as you keep up with your mortgage payments. And you'll have an opportunity to build home equity, which could work to your financial advantage.
But when it comes to homeownership, there's a lot of misinformation out there. And it's important to know the truth about these common myths before you take that leap.
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Landlords often have the goal of securing enough rent to cover their own mortgages and expenses of homeownership. And in some cases, the amount you pay in rent may be more than what your monthly mortgage payment might be for a comparable living space.
But make no mistake about it. When you buy a home, there are a host of expenses you might encounter, like maintenance and repairs, which can make that home more expensive than a rental. In fact, it's those expenses that tend to catch new homeowners off guard.
If you sign a fixed-rate mortgage, your monthly payments will stay the same until you either refinance that loan or pay it off. But that doesn't mean your overall housing costs won't change.
Property taxes have a tendency to increase over time, and the amount you start out paying likely won't be what your bill looks like 10 or 15 years down the line. Similarly, your homeowners insurance rates could rise, and as your home ages, it could end up needing more maintenance and repairs. As such, you can't go into homeownership expecting your costs to stay the same for years.
When you rent a home, you have to follow a landlord's rules. When you own your own home, you get to call all of the shots -- unless, of course, you live in a home that's part of a homeowners association (HOA).
HOAs are common among condos and townhouses, though regular standalone homes can be subject to them as well. And some HOAs impose strict rules that could limit the way you use and manage your property.
Often, HOAs won't tell you what color to paint your bedroom walls or what appliances to put in your kitchen. But they may impose rules about the type of flooring you need to have (for example, some may ban hardwood for upper-level condo units since that can cause too much noise for downstairs neighbors). And it's pretty common for HOAs to ban pets or ban certain dog breeds.
An HOA might also prohibit you from conducting any sort of business out of your home. The rules vary from HOA to HOA, but the point is that you can't assume you'll get total autonomy if you buy a home that's part of one.
Owning a home has a lot of benefits. But it's important to know what you're really signing up for. You may find that owning a home means spending more on housing, seeing your costs rise over time, and not having complete say over your property. As long as you're aware of that, you can embark on a home search with more confidence.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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