For apartment dwellers living deep in the heart of big cities like Toronto or Vancouver, owning a home can be somewhat of a pipe dream.
Unless you're still living with your parents who bought the house in the fifties for $20,000, you'd be hard pressed to come up with the upper hundreds of thousands of dollars that would be needed today in order to buy that same house. So, for many, renting a home or an apartment is their only viable option.
Well, if you're reading this then odds are you're not in the belly of Toronto and can afford to make the leap from renting to buying. Remember the lottery add saying that money goes as far as it should in the Maritimes?
Instead of using your hard-earned cash to pay the landlord's mortgage, you can use the rent money to buy a home of your own. With today's reasonable rates, mortgage payments are often less than monthly rent payments, making home ownership more attractive than ever.
Buying a home makes sound financial sense, but the benefits extend much farther than that. For example, if you're 35 now and just buying your first home, you'll be mortgage free when you're 60. And this is paying at a normal rate with a minimal down payment.
When it's all paid off you'll be sitting comfortably on a considerable asset. It could mean financial independence as a senior, and the opportunity to enjoy your golden years.
It's also highly likely your investment will appreciate considerably in
25 years (remember Vancouver that long ago). Although not every place will see that kind of rise in housing cost, you can pretty well be assured that it will rise. However, don't buy now with the intention of making a quick fortune. Think of home buying as a sound, long-term investment. And as far as investments go, buying a house is a very effective way of saving regularly for 25 years. Even if you never buy into another retirement savings or investment plan, you are effectively putting money away for the future when you buy a home.
Keep in mind too that with many kinds of investments, you have to pay a capital gains tax on money you make. With a home you don't have to pay that tax when the value of your house goes up. This means you can keep more of the money your investment earns.
Besides financial considerations, owning a home of your own means you can set down roots, get to know your community and involve yourself in it. Kids can make friends in the neighbourhood, many of whom will probably go to the same school and be involved in similar recreational groups.
You'll soon too discover the pride of home ownership. You can fix up the place to suit your particular needs. Knock out that cupboard under the stairs or put a darkroom or woodworking room in your basement. You can even try those fancy paints or finishes, put murals on the walls, build a deck or create the kitchen you've always dreamed of. You can enjoy the touches you put into your home for as long as you want, and then you can change them again. Why -- because you're the landlord, that's why.
Another reason to buy over renting is that when your family grows and moves on to homes of their own, you have the option of earning extra income by renting out spare rooms or even floors if you have them. Then you become the landlord. It's also a big benefit to have your own home if you're planning to borrow money from a bank or other financial institution. Owning your own home, and hence having some collateral, is a definite plus when it comes time to negotiate.
Granted, for some with a limited or fixed income, the overall price of a home may seem a bit daunting. However, look at it this way, If you pay $750 a month for a rental unit and never face a rent increase, after 25 years you will have paid a total of $225,000 -- and have nothing to show for it. If, like most people, you face an annual rent increase of, say, five per cent, you'll have paid out $430,000 to a landlord. That kind of money buys a lot of house today.
And if you think that you don't have the money for a down payment, you may not need as much money as you thought to get into the home market.
Your Real Estate professional can help explain the details of everything you need to know, and can help you move from someone else's place, to a home of your own.
Source: Published Saturday December 13th, 2008 - Times&TransScript