There are a 2 main factors that you need to consider when deciding whether to rent or buy. There are many advantages to home ownership, but depending on your lifestyle, it may not be the best in all situations.
First, you need to see whether you can comfortably cover all of the costs of owning a home. Beyond the mortgate, there are taxes, heat, hydro, water, possible condo fees, and the last and often forgotten fee of home maintenance. You need to have extra cash on hand for suprises like a leaky roof or your washing machine breaking down. If you don’t take care of your home, you will not get a good return on the home when you go to sell. So be sure to factor everything in.
After this, be honest with yourself about your lifstyle; your shopping, eating out, and other entertainment. You need to be real about how you live, and make sure it is factored into your costs. You can easily find yourself sinking into debt after buying a home if you continue a lifestyle that is beyond your budget. Be aware of where you stand before buying a home, to see if you can find middle ground that you are happy with.
Lastly, buying a home can be one of the best investments you ever make. But it is a LONG term investment. If you don’t know where you will be 2 years from now, you are probably better off to rent. You don’t start building equity in your home for at least 4 years, and if you need to move before this, you can actually lose money when you sell.
Once you are fairly confident that your career location is fairly stable, then you can consider a home as a great option. If you rent when you know you are staying in the same location, you are missing out on 2 financial opportunities of A) building equity in your own pocket and not a landlord’s and B) Gaining the long term market appreciation, which you can only do once you get yourself on the property ladder.
When making this decision, it is very temping to ask everyone you know “Do you think it’s a good time to buy?” Please don’t do this!!!!! You will get every answer under the sun, based on other people’s motivations, fears and biases. You need to look at the factors stated above and make the decision for yourself.
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