Are you ready for home ownership?

Taking the plunge into home ownership for the first time can be very daunting as well as exciting. The purchase of a home is the single largest financial transaction that most people will ever make in their life time. It is a major commitment that should be considered very carefully. If you are considering buying a home but don't know if you are ready for the responsibilities that come along with it then consider the following:

You do not anticipate that you will be moving within the next few years. If you can't say that, then you need to understand that there may be mortgage payout penalties and real estate commisions that could be very costly. It takes time for your home to appreaciate in value and for you to pay down the mortgage.  If you have not yet built up enough equity in your home then selling too soon could be very costly indeed. This is particularly true if you have a high-ratio creditor insured mortgage (ie; you put down less than 20% down you will have paid creditor insurance that would be added to the mortgage balance). I am not saying that you shouldn't buy in this case necessarily but this is something that would need to be factored in when making your decision. With proper planning, sometimes it is possible to rent out the property once you move on. Ask me more about this option.

You are ready for the added expenses of repairs and maintenance. Not only do you need to consider the mortgage payment and property taxes but you are fully responsible to take care of any maintenance or repairs that may be required. Would  you be able to cover these things are or you already on a tight budget? Setting aside some savings for this is a good idea. A home inspection may help you determine and plan for things like a new roof or windows that may be needed in the future.

It  is currently more expensive to rent than to buy right now.  If the prices or homes and interest rates make purchasing a home more affordable than renting then it may be time to buy. With today's super low interest rates and lower real estate prices, it often makes buying more affordable than renting.

You have saved for a down payment and closing costs. Although there are mortgage options available where you may be able to buy a home with no money down, it is still much better to have a down payment. Also, you would still require about 1.5% of the purchase price available for closing costs.

You like the idea paying your own mortgage instead of  your landlord's. For most people, buying makes sense for the long term since you will at some point be mortgage free but rent will always be there. Also, at the end  you will have an asset worth money when you sell. You can't say that about renting. Pay yourself and build your own wealth!

You want to be able to make improvements to your tastes and needs. No need to ask your land lord if you can paint the living room that funky colour. You're the boss! Also, any money and effort you invest in your home would go toward your own investment not your landlord's.

If you have answered yes to most of the above then chances are you are ready for home ownership. Let me help you make that dream a reality.I would be happy to sit down with to help you make the right decision for you. Even if you are not ready today, together we can come up with a workable strategy to plan for home ownership. Give me a call at 403-392-5808 or send me an email at tgrozelle@regionalmortgage.ca. Of course, there is never any obligation and my services are FREE!

Home ownership trumps renting in personal finance stakes -Calgary Sun

Owning the roof over your head should still be a goal for most Canadians, as paying rent is like paying someone else's mortgage, experts say.

The Bank of Canada gave its clearest signal so far this week that interest rates are set to rise, while a growing number of real estate watchers and some economists are forecasting property prices will decline.
Given such a scenario, some first-time buyers may be tempted to hold off on what's likely to be one of the biggest purchases of their lives, though that may be a mistake.
Judith Cane, president of Antara Financial Group, said she has just advised a first-time buyer to get into the market.
They had been renting for four years and when they calculated how much they had been paying out, they decided they didn't want to wait another year, Cane said.
"I am of the mind that it's always good to buy," said Cane, whose fees comes from clients paying for her advice and not from commission on the sale of financial products. "People may have to lower their expectations about what they can afford, but it's better, especially if you are younger, to put your
money into buying rather than renting."
About two-thirds of Canadians currently own their own homes, with men more likely to be homeowners than women at 69% compared with 63%, according to a recent BMO survey. Those least likely to have taken the plunge were in the 18-to-34 age bracket. Only a third of those surveyed in that age bracket were homeowners.
"If you have the opportunity to get into the market, it's a great time to buy," said Laura Parsons, a mortgage expert at BMO. "In many places it's a buyers' market."
"There are a lot of renters out there and it's very lucrative to have a rental property," she said, pointing to rising Canadian rental prices.
According to the Canadian Mortgage Housing Corp., the average monthly rent for a two-bedroom place was $864 in April, up from $848 in April last year.
That price rises to $1,181 in Vancouver and $1,124 in Toronto, Canada's costliest cities.
With interest rates currently so low, mortgage payments for an average $300,000 property are unlikely to be that much higher than rental payments.
A fixed-rate mortgage of 5% and an amortization period of 30 years would put monthly mortgage payments at $1,521.02. Adding in property taxes, monthly payments are likely to be about $1,771.02, according to figures supplied by BMO.
If a monthly rental of $1,200 increases by about 5% a year, after eight years your mortgage payments will be less than your rent, BMO says.
Cane said the main argument in favour of renting over buying is if you are highly mobile and plan to be in a location for less than five years. In that case, renting is probably the best option.