Doesn’t it seem like everyone around you is buying a home these days? For good reason, there are so many advantages to home ownership. How about you? Are you currently renting? Ever wonder if it is better to rent or buy a home for your situation? Use these 3 pro tips to help you decide.
Rent or Buy a Home?
Renting can make for an easier lifestyle. You’re not responsible for fixing your appliances or household repairs. Often, renters don’t worry about the water bill, or the need to cut the grass after a long work day. There are definitely some lifestyle perks to being a renter.
Unfortunately, the financial reality is that your rent payments are only making your landlord rich, not you. You’re not building an estate for retirement, or to pass down to your children. You might even think you are throwing your money away by renting.
Home Ownership Benefits:
Life is full of developmental stages, like graduation and marriage. For some people when they start their family, purchasing their first home is the next natural step.
Roughly two-thirds of all Canadians (66.5% for 2014) own their homes. This is a fairly high ownership rate compared to the rest of the world. Here are the benefits of owning a home:
Land is wealth. When you rent, you are making your landlord wealthy and not adding anything to your own personal financial portfolio. Ownership allows you to accrue “home equity,” which you can borrow against with home equity lines of credit (HELOC).
The standard down payment for a home has been 20%. You gain a solid home equity stake and show that you are financially committed to paying off your loan. For a down payment of less than 20%, you might be required to pay mortgage loan insurance.
Can you afford a house?
A great time to think about buying a home is after inheriting a large sum of money. You could use this lump sum as a down payment for your first home, or use these 4 ways to get a down payment.
Do You Have a Stable Income?
How long have you been working at the same job? An employment offer letter or recent job change will weigh significantly in a lender’s decision. Is your company financially sound? How is the overall industry?
Self employed? Here are 5 mistakes that will kill your chances of being a home ownerIn order to pay off your mortgage, you will need stable employment. You also should have some savings to handle economic downturns.
These are some of the questions that your financial lender will ask when considering the merits of your loan application.
Maintenance, Repairs, Insurance & Taxes
Besides the monthly mortgage payment, you will also have other expenses. In order to move into your new home, you need to pay closing costs. You will also have new monthly charges for insurance, water billing and solid waste management fees. Also, you should include expenses for maintenance, repairs and landscaping.
Financial Step 1: Write down your budget to see if you have the surplus cash to pay for a home.
You can use a mortgage calculator online to compare your costs for renting and home ownership. See how much you need to budget each month.
Next calculate your net worth. A new worth calulcation provides a clear picture of your financial capabilities to own a home, and helps you make more informed decisions about your future mortgage possibilities. Use this free resource to calculate your net worth
One of the primary reasons for moving into your first home is to dedicate an entire room for a new baby. In addition, there are many incentives for first time home buyers. You should probably discuss how your family members feel about home ownership. They might get their own room, but they must also be required to do more work.
Growing Family Needs Room
Think of all the possibilities: a room for mom, den for dad and an play room for the kids. You will also have more storage space in the attic and basement.
Emotional Step 2: Ask your family members what they think about purchasing a home. You can create a more peaceful environment when everyone has space to grow.
Most Canadian mortgages last about 5 years; thus, you should think about whether you plan on staying in the same locale for that long. As a homeowner, you will be paying property taxes and asked about noise, traffic and other issues effecting your land.
Valuable Member of Community
We, Canadians have an advanced, mature mortgage market, which allows families to find the ideal living arrangements. By owning your piece of Canada, you increase the wealth of the entire nation. You can enjoy more living space for your growing family. You become part of a community of people equally invested in their properties.
You might be uncertain of whether you should rent or buy a home. Think carefully about where you are in your life and if you are ready to make the leap to home ownership. Many Canadians are homeowners and if the time is right for you, then it could be a great way to expand your living space, build your wealth and control your destiny.