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Choosing between renting and buying a home is a decision that requires careful consideration of your individual situation. By asking yourself these four key questions and consulting with a trusted Real Estate professional, you can make an informed decision that's right for you. Whether you choose to rent or buy, the most important thing is to find a home that fits your lifestyle and budget.
With over 23 years of experience as a Real Estate broker/agent within the Oakville, Burlington, Mississauga, Milton, Hamilton, Stoney Creek, & Greater Toronto Area, I have helped many individuals move from renting property to purchasing their first homes. There are many factors to consider, including your financial situation, lifestyle, and future plans. In this article, we will explore four key questions you should ask yourself to help determine whether renting or buying is the right choice for you.
1. How Long Do You Plan on Residing in Your Home?
One of the most critical factors to consider when deciding whether to rent or buy is your long-term goals. Are you planning to stay in the same location for an extended period, or do you envision yourself moving frequently? If you plan on staying in the same area for many years, then buying a property might be a more attractive option, as it can potentially lead to long-term savings and equity. However, if you're not sure where you'll be in the next few years, then renting might be a better option for the flexibility it provides.
Always keep in mind that owning a property will build equity, whilst renting is paying down the Landlord’s mortgage not your own.
2. Will I Qualify for a Mortgage?
Your current financial situation will play a significant role in your decision-making process. Buying a property requires planning for a down payment, closing costs, Land Transfer Tax, and Legal fees. On the other hand, renting typically requires a security deposit and first & last month's rent.
Though details such as your gross income, credit score, and current debt will determine how much mortgage you qualify for and will also determine at what interest rate. Your credit score plays a crucial role in determining whether you can qualify for a mortgage and the interest rate you will be offered. A higher credit score typically results in a lower interest rate, which can save you money over the life of the loan.
3. Can I Afford All the Costs of Being a Homeowner?
It's essential to consider how much you can afford to pay each month when deciding between renting and buying. When you buy a property, you'll have a monthly mortgage payment, utility costs, property taxes, insurance, and maintenance costs to consider. Alternatively, when you rent, your monthly payment includes rent, utilities and insurance. Consider your current budget and lifestyle to determine which option is more sustainable for you and your family. A mortgage approval with a bank or mortgage Broker is essential in order to know what your purchase power is and a breakdown of mortgage payments and affordability for you.
4. What is the Current Housing Market Like?
The current housing market can also play a role in your decision to rent or buy. The current housing market is active with a continued shortage of inventory, and well-priced homes that show well are experiencing multiple offers again. With the influx of immigrants coming, the demand for housing will be even greater. Don’t wait to get into the market as prices are not going down.
By asking yourself these four questions, you'll discover whether you are prepared to begin the process of purchasing a home or determine whether renting is more suitable for your lifestyle and current circumstances.
If you have any further questions or are ready to have a conversation on the first steps toward homeownership, the Joette Fielding Real Estate Group can help. Contact us for a consultation or download our free home buyers guide.
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