Most people dream of owning a home. When compared to renting a property, buying a home is usually hailed as the smarter long-term investment. As great as the idea of becoming a homeowner is, you have to be realistic about your decision. There are definite pros and cons to buying and renting, but the better option will come down to your personal needs. Here are some things to think about to help you figure out your living situation.
Most of the time, buying a house is going to be more expensive than renting a house. In addition to the mortgage payments being more expensive than monthly rent, you'll have to worry about other costs. The down payment on the home is usually between 5 to 20 percent of the total cost of the home, but putting more down lowers the total interest you'll pay over the term of your mortgage. If you are putting down less, you have to also pay for mortgage default insurance. Then there are closing costs and plenty of additional fees to boot.
It's no secret that Canadian homes located in the most scenic or bustling areas are extremely expensive. The average homeowner cannot always afford to buy homes in those highly desirable locations. If you are determined to live in a certain hot spot, renting could make it all possible. While rent in prime locales will still be relatively high, it should be significantly cheaper than a mortgage in the same areas. If you're set on buying a home, you may have to lower your expectations to stay within your budget. Compromising is often necessary when prime location is the number one priority.
Another thing to consider before sinking serious cash into a home is the duration of your occupancy. Many people buy homes when they believe that they'll reside there for a significant amount of time. Ask yourself several questions before making the decision to buy a home. Do you have a stable job that's within a reasonable distance from the home? Does your job require you to travel frequently and for extended periods of time? Do you plan on having children in the next few years and expect to upgrade to a larger residence? Is it possible that you'll have to relocate permanently for another job?
You can use our Mortgage Affordability Calculator to see how much mortgage you can afford.
If you've never really cared about homeownership, renting might be a better idea because you'll likely save more money on a monthly basis and have greater freedom to move around. Some people simply prefer to not be tied down to one place as you can be when you choose to buy.