Buying a home vs. renting – which one is best for you, your budget and your lifestyle? Those are all great questions – and ones a financial advisor can help answer. Deciding where you want to live and if you want to invest in buying a home is probably one of the biggest financial decisions you’ll ever make. So, let us help weigh the pros and cons of both. After all, buying a home will have financial impacts on all other aspects of your life and it’s always a good idea to be prepared.
The benefits of renting
Some people enjoy the carefree lifestyle that comes with renting a home. Financially, renting can be easier to manage in your monthly budget because it’s easier to keep track of money when there’s only one monthly bill to pay.
In many cases, renters are only responsible for paying rent – and renter’s insurance to protect your personal belongings. But all the extra costs that come with homeownership such as property taxes etc. aren’t a renter’s responsibility.
However, the downside of renting is the place is not yours. Renting an apartment, home, townhouse or condo provides a carefree lifestyle in the sense that it’s not yours, you’re not responsible for the upkeep, mortgage payments, property taxes, maintenance and property. But the downside is, it’s not yours.
In the bigger picture of a financial plan, renting can be an OK short-term expense, but it’s not a long-term investment like buying a home.
The benefits of buying a home
If you’re a long-term thinker, if you’re a planner or if you like financial stability, buying a home is probably the right financial decision. Yes, it can be more expensive than renting. Yes, your budget may take a hit at the beginning as you adjust to your new cost of living. And yes, you may have to sacrifice some other financial luxuries, but it’s all for you and your long-term financial plan – not to mention you can live there as long as you want. You can never be evicted from your own home.
Buying a home can leave some people house poor a.k.a. with a lack of cashflow and liquidity due to the financial commitment of buying a home. But isn’t it worth it to have a place to call your own and know your monthly bills are being invested into an asset that will be fully yours in the future? We think so.
Don’t get us wrong, buying a home comes with additional costs. But we’re here to help you plan for them. Here are some of the additional costs to save for when buying your first home:
How to plan when buying a home
When you’re ready to buy a home, we’re here to help make it happen. If buying a home is in your near (or far) financial plans, we want to help you get there in a way that makes financial sense for you and your family.
After talking with a financial advisor, the next step is to find a mortgage broker in your area. A mortgage broker can help determine how much you can afford, lock in your interest rate and provide a pre-approval for your real estate agent. You can also get a head start by using a mortgage calculator to determine your projected homeowner costs.
Once you know how much you can afford, it’s time to find a real estate agent. They’ll help you be realistic about the type of home that fits into your budget, explore neighbourhoods that are within your price range and negotiate the deal with the seller.
That all sounds exciting, doesn’t it? Buying a home is a big financial decision and a long-term investment – and it all starts with a conversation with a financial advisor. Contact us and let’s talk about fitting homeownership into your budget and your financial plan.
