Traditionally, owning a home is seen as part of the American dream and a goal everyone should have. In part because it’s viewed as something so normal and universal, you might not think to question some of the beliefs you have about buying and owning a home. Instead of relying on your assumptions, take some time to investigate what home ownership is really like before you decide whether or not to buy.
The Home-Buying Process
Although buying your own home could be one of the most gratifying experiences of your life, it’s still an expensive and time-consuming process. The more you know going in, the better decisions you’ll make about how home ownership will fit into your life.
1. Buying is Always Better than Renting
Nearly every real estate agent will claim this is true, but in reality there are some situations in which renting makes more sense. Instead of assuming you’re “throwing money away” on rent, consider the other factors involved. This includes how long you want to live in that area, the cost of rent in the area, the mortgage rate you qualify for, on-going costs such as maintenance, property tax, and insurance, and how much houses in the area are expected to appreciate.
2. A House Is Always a Profitable Long-Term Investment
While most real estate appreciates, it typically does so at a very low rate that works out to around 1 percent per year when adjusted for inflation. If you’re looking to grow your money, you’d be better of investing in stocks and bonds or even buying Treasury bills. The primary benefit you get out of owning a house is the intangible pleasure of living in it. The financial benefits are minimal.
3. You Can’t Buy If You Can’t Come up with a 20 Percent Down Payment
A house is one of the biggest purchases of most people’s lives, so the costs involved can seem overwhelming. It’s easy to assume there’s no way you could find the money. Not everyone needs to pay 20 percent down, though. If you have good credit and meet a number of other requirements, your lender might ask for only 5 or 10 percent down. Although you’ll usually need to buy mortgage insurance when paying less than 20 percent down, a lower down payment can still be the extra support you need to get into your own home.
4. You Can’t Get a Mortgage with Less Than Stellar Credit
The days when nearly anyone could get a mortgage are gone, but that doesn’t mean you need perfect credit to be approved. Although credit requirements have risen, it’s still possible to get a mortgage even if you have a few blemishes on your credit record. The plus side of this is that you’re less likely to end up with an unmanageable mortgage payment and won’t find yourself with more home than you can comfortably afford.
Caring for Your Home
For as much joy and satisfaction as there is in owning your home, there’s also a lot of responsibility. Having a realistic sense of what caring for a home entails will help you better prepare.
5. All Renovations are Profitable
When you plan to live in a home for years, it’s only natural you’ll want to do some remodeling and make renovations and upgrades to ensure your surroundings fit your lifestyle and personal tastes. Renovations like these improve your quality of life, but they don’t necessarily increase your property value. In fact, you might not even recoup the costs when you sell your home. Minor improvements such as repainting or replacing damaged countertops with cost-effective material will help the house sell faster, but not always for more.
If you decide to renovate with the goal of financial profit, focus on features that are known to increase property value, such as flooring, bathroom and kitchen fixtures, and kitchen cabinets.
6. It’s Worth Learning to Maintain Everything Yourself
When you first move in, doing everything around the house yourself can feel like a way to enjoy your new purchase. After a while, though, you might realize it’s just not worth your time to do routine maintenance tasks such as mowing the lawn, cleaning the gutters or resealing the driveway yourself. In many cases, it’s smarter to hire someone who has the skills and tools to get the job done better and faster than you could. This lets you spend your time more effectively elsewhere.
What’s more, some systems in your home, such as your heating and cooling, plumbing, and electrical systems, require professional maintenance in order to continue operating reliably, safely, and efficiently. The same goes for certain appliances, such as your water heater and clothes drier. While you should maintain these systems to the extent that you can, skipping professional maintenance can lead to expensive problems and put your safety at risk.
7. It’s Important to Plan for All Home-Related Expenses
Homeowners insurance and an emergency cash fund are important parts of responsible home ownership and will help you cover most of your unexpected costs. Beyond this, though, there’s no way to be absolutely certain you can cover every cost involved in owning a home. It’s impossible to list everything that could go wrong or think of every upgrade you might want to make. So don’t assume you’re not ready to own just because you haven’t calculated all your future costs yet.
8. You Can Make Every Room Look Exactly as You Want
While owning your home gives you complete freedom of expression as far as design and decor go, you’ll also need to consider your budget. Those perfectly styled rooms you see in interior design magazines might cost more to create than you realize, especially when you add up the costs for every room.
What’s more, finding the exact paint, carpeting, furniture, curtains, and other decor elements you want will take some time. Instead of stressing yourself out trying to get everything perfect, look for budget-friendly, DIY ways to get a look you’re content with for now and learn to take pleasure in what you have.
Buying a house is a major investment of money, time, and energy, so if you’re thinking about becoming a homeowner, take the time to learn as much as you can about both the home-buying process and the realities of owning a house.