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Myth: Your Mortgage Payment is Your Only Expense

Far too many homeowners neglect to consider the holding costs involved in owning and maintaining a home. Most people think they’re accustomed to accounting for utilities in their budget, but they may forget about trash collection and water, which landlords often cover. There are also ongoing repairs and expenses that come with being a homeowner, and those may take new buyers by surprise.

Like many of the myths on this list, the best approach is to be as informed as possible. Actively question your home inspector or other construction and maintenance pros about what kind of repairs and maintenance you should expect, and budget accordingly. And if you’re looking for ways to keep your maintenance costs low, read through this fantastic list of simple and affordable maintenance tips.

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Myth: You can Afford any Home if the Payments are Less than 36% of your Income

The old guideline about matching the principal, interest, taxes and insurance (PITI) to 36% of your income is a benchmark that lenders use when first analyzing a potential mortgage. Like most myths, there is a nugget of truth in this one. The 36% guideline is still used by lenders, because they don’t have to consider the whole picture. But of course, the big picture is exactly what you have to be concerned with!

Instead, sit down and track your spending for at least two months to get a feel for what your real budget is. You don’t have to delay the house hunting process, just keep your eye on your spending, watching for any red flags. If owning a home is a big enough goal, it may even inspire you to trim spending in other areas.

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Myth: Vacation Homes are a Waste of Money

This is one of those myths that’s held by experienced homeowners as well as newcomers. Owning a vacation home takes a different mindset than owning a personal residence. But that doesn’t mean that they have to be a losing proposition! Vacation homes are often located in high-demand areas and are rented out on a nightly basis at tourist rates, meaning that even moderate occupancy can allow you to break even on the mortgage payments.

The trick to owning a vacation rental is approaching it as a business. When building a budget, factor in expenses for marketing, housekeeping, management, furnishings and guest supplies such as paper towels or bottled water. But there’s one other major factor to keep in mind: chances are you and your family will use that vacation home as well! For many people, a vacation home that breaks even or loses some money is still worth it in the long run, if it allows them to have their own property in a dream destination.

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