Is this the right time to buy a home? If you’ve already started taking virtual house tours and you need to have your own home is becoming more and more urgent there are many things you need to make sure to take into account beforehand. Here a few of them.
Where do you even start? First compare the price of your rent to your future mortgage payments. Your advisor will be able to run a mortgage simulation with you. There are also online tools and calculators to help you get a better idea. Financial discipline will help you achieve your down payment goal.
A house is not just a mortgage. As a first-time buyer, you often forget all the other expenses that need to be taken into account like the land transfer tax (welcome tax), municipal and school taxes, notary fees, property insurance and condo fees, if applicable. There are also related expenses like purchasing appliances and new furniture. That means reallocating revenue to other expenses in the budget. In fact, in the first seven or eight years as a homeowner, a house usually costs more than renting.
However, its long-term returns are significant. A property is an asset that is added to your wealth2. The financial security aspect is something that can be very profitable, particularly when real estate grows. For example, a recent study shows that the average net worth of homeowner households doubled from 2000 to 2016, while the net worth of renter households stagnated. What’s the main reason for this difference? The value of their major non-financial asset is their home3. The return on their purchase relative to the renting is clear in this case. Owning property also brings a certain quality of life. In fact, for a single-family home, it can contribute to your peace of mind since you own your home and have more privacy.
Carefully assessing your future down payment and all the expenses that you need to plan will make your search for property more fruitful. Not to mention that becoming a homeowner is a long-term investment that can be positive for your financials. This is not an exhaustive list for considerations before purchasing a home. Your advisor will make recommendations after having established a picture specific to you, based on your financial situation, where you live and the type of property you are looking for. Lastly, the economic context will likely influence your decision to buy a house. Happy researching!
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