Home ownership

Buying a home can be complicated, and it is likely the biggest financial decision you will face in your life. The housing market is changing all the time, and there are lots of antiquated sayings or supposed “rules” that you will hear about. If you are in the process of buying your first home, it’s important to know which sayings are helpful and which are just myths.

Here are some common misconceptions about homebuying.

1. Buying Is Always Better Than Renting

Even if you are planning to settle in one place for the foreseeable future, renting may still be the smarter option for you. This is usually because buying a home requires a bigger upfront payment that you may not be ready to make. Also, in some areas monthly rent payments may actually be lower than monthly housing payments. Using a rent versus buy calculator can help you see which option is better for your specific situation.

2. You Must Have a 20% Down Payment

The bigger a down payment you can make, the less you will have to finance with a mortgage. This in turn means you pay less in interest and can often put you in a better position. However, you can secure a loan with less than 20% down. Just be aware that you may have to deal with the added cost of private mortgage insurance, which protects the lender in case you default on your loan.

3. Real Estate Will Go Up in Value

Historically, home values have risen, but that doesn’t mean you’ll make money on your purchase. The past decade has shown just how volatile home values can be, and if you find yourself in the situation where you have to sell during a downturn in the market, you may get less money than you paid when you originally purchased the home. That’s even before you consider transaction costs, which can be considerable.

4. A 30-Year Fixed Mortgage Is Best

While many first-time homebuyers go for the conventional 30-year loan, there are othermortgage options worth considering like an adjustable-rate mortgage or a shorter-term fixed-rate loan. If you can afford a shorter term, you will spend less on interest. If you can’t afford the higher monthly payments, then maybe you should go with the 30-year option.

5. Down Payment + Monthly Payments = Total Home Cost

If many of your peers have houses, you may be gauging your ability to afford a home incorrectly. Your credit score, debt load, income and a number of other factors go into your home affordability. (You can check your credit scores for free on Credit.com to see where you stand.) A common misconception is that the main cost after down payment is monthly principal and interest payments, which you can predict. In reality, you will also incur upfront closing costs, maintenance and repairs, homeowners insurance and property taxes so important that all of these are worked into your budget when you become a homeowner.

Whether they are pushing you to buy too soon, too much or the wrong way, it’s a good idea not to fall victim to these common myths. The important thing is to make the right decision for you in your specific situation.

This article originally appeared on Credit.com and was written by AJ Smith.