Weigh pros and cons of home ownership before purchasing 0
Most renters dream of owning one day, but knowing when to get off the pot and buy isn’t always easy. Of course, ask almost any realtor and they’ll say, “right now is the best time to buy.”
When looking at the price of Vancouver homes over any five-year period since 1964, you’ll see that their value just keeps on appreciating. But there’s more to factor in than just what’s going on in the market, according to John Charbonneau.
The senior mortgage planner at TMG the Mortgage Group notes deciding when to buy and when to continue renting should be based on an individual's circumstances. Here, then, are five things to consider should you find yourself at the ‘to buy or not to buy’ crossroads.
While you might be able to beg, borrow or inherit just enough for a down payment, don’t forget about closing costs. These include such things as moving charges, title insurance and attorney fees. Then there are the ongoing costs such as strata fees and property taxes, among others. If those extras aren’t in your current budget, you might be better off waiting to buy.
A lot of renters think, “Well, if I can afford $2,000 a month to rent my Yaletown pad, I should probably put that toward a mortgage, yes?” Thing is a $2,000 monthly mortgage is probably only going to get you something outside the city limits. Which is fine as long as you’re willing to give up the convenience of being in the heart of the action.
Save More Money
You could scrape together a 5% down payment, but then you’ll have to cover a pricey mortgage insurance fee. So it might be better to hold off on buying until you can save a bigger down payment.
Most single people put off buying until they find someone special. But what if you never meet your life partner? Thankfully, there are other options. You can go in half ownership with a trustworthy friend, or you can buy a two bedroom and rent out one of the rooms to help with your overall housing costs. Keep in mind, however, that your bank will most likely not factor a roomie into your total loan qualification — you still have to prove that you can cover your monthly mortgage on your own, if need be.
Qualifying vs. Reality
The industry standard is to approve a mortgage loan that breaks down to 39% of your gross income. But be careful before you commit to that amount. Instead, look at what you take home and then subtract all your monthly expenses. What’s leftover after that might not be enough to buy a shoebox in the sticks. Again, you may want to wait until your financial situation improves before taking the home-buying plunge.