Are you a renter who is thinking of buying a home? It is the great dream, but many renters don't really understand its potential impact on their lifestyle and finances. Buying a house can be the most rewarding purchase you ever make. It's better to buy a home than to rent. You could compare buying to renting to see the advantages of both. But before you decide which is better for you, you need to answer the following:
1. How often do you expect to move in the future?
You should only consider buying a house if you don't expect to be moving a lot.
2. How stable is you employment situation?
You should only consider buying a home if your employment is indeed stable. Home ownership requires a number of regular payments like the mortgage, property taxes, maintenance, insurance, etc.
3. How much can you afford to pay for housing?
To answer this question you need to prepare a detailed monthly household budgeting plan. You need to look at how much rent are you paying now? And what is the maximum amount you are willing to pay?
4. Are you able to save money every month?
If you buy a home its important to have some money set aside for emergencies.
5. Is it important to you to own your home?
Some would argue that this is the first question you should ask yourself. Home ownership, like everything else, is a matter of choice. Only you can decide whether or not home ownership is important to you. If it is then you may want to re-assess how you spend your money every month.
6. The math
Although, it might seem that you will be spending more money on buying a house than renting, you need to consider your options and priorities. There are many more advantages of purchasing a home over renting.
Housing costs can be divided into shelter costs and investment costs. When you rent, you pay your shelter costs, and the landlord pays the investment costs. When you buy, you pay both, which is usually more. Ten years later when you sell the house, you will find that your investment did well and you saved a lot of money by buying. Buying a house is an investment, and for many people it is a good one. You can purchase insurance to help you manage any potential risks like fire, earthquakes, and thefts. Remember to take your buying/selling costs into account when considering selling your home; the strength of the real estate market in your area will determine how long it takes to recoup your costs.
One of the greatest joys of ownership for many people is setting down roots. When you buy a house, you have your own land, your own house, and a sense of becoming part of a community; meeting and sharing with your neighbours, and getting involved in local issues. This lifestyle can be very attractive, especially if you have children who will enjoy the stability a home can provide.
You can expect that your initial mortgage payments will be higher than your current rental costs. However, there are factors that make the decision to buy less painful like tax savings and other factors including building equity that offsets the additional monthly expense.
Buying a house is usually a sound long term investment as it help you in the following way:
- Building equity vs. throwing your hard-earned money away as rent
- Real estate generally appreciates; a house bought today is worth more a few years down the road.
- In most cases there is no capital gains tax payable on the profit on a primary residence.
- In some cases mortgage interest is tax deductible. Please contact your accountant for advice.
To find out more about the positive aspects of home ownership and if you qualify to make the transition from a renter to a homeowner, contact your real estate agent. Real Estate agents will be more than happy to provide you with a consultation to see if you are a candidate to purchase a home.