Rent vs. Buy
Should you continue to rent or consider buying your own home? Deciding which is
right for you requires careful consideration. While apartment living may have become
tiresome, and you may be sick of paying out money to live when you could be investing
in a nice home, the freedoms and joys associated with home ownership need to be
weighed against the financial costs or gains. The truth is that purchasing a home
is probably going to require going into debt. And, it is also going to mean taking
all or part of your nest egg and using it to make a down payment.
To make a sound financial decision on whether to continue to rent or to buy, the
first step is to determine whether you have enough cash on hand to make a down payment
of at least 5%. Next, you’ll want to calculate all the additional fees and costs
associated with purchasing a home. These costs include origination fees, property
taxes, closing costs, maintenance or association fees, sales commission costs and
if applicable, mortgage insurance. Once you have this information gathered, you’ll
want to combine it with the purchase price, interest rate, the term of the loan,
expected home appreciation and inflation rates. Once you have a clear picture of
what buying a home would mean in terms of financial gain, you’ll want to measure
that against the cost or gain of staying in an apartment. In other words, if you
took the same amount required for closing and down payments and invested or saved
them instead, how would your financial gain look when compared to making an investment
in a new home?
Ratesheet.ca has developed a rent vs. buy calculator to the help you sort through
the fees, taxes and additional monthly expenses so you can make a sound financial
decision.
