BUYING VS RENTING A HOME

When it comes to a home, you have two options: buy or rent.  What is right for one person may not be right for another, which is why it's important to know which is the best option for your individual situation. 

Why People Rent

There are a number of reasons why someone may either choose or be forced to rent, including sporadic or unpredictable income, a high debt-to-income ratio, a bankruptcy or foreclosure within the last six months, unpaid collection accounts or judgments, frequent relocating for employment or the inability to save enough money for a required down payment on the purchase of a home.

Maintenance Matters

As a homeowner, you will be responsible for any maintenance or repair issues that arise.  This is a big consideration when choosing whether to rent or buy.  When you rent, the property owner is responsible for repairs and it may not always be obvious that these issues can be very costly.

How To Know When It's Time To Buy

If you have steady income with a good employment history, can provide a down payment of at least 5-10 percent of the purchase price and are current with all debts, it may be time to consider buying a home instead of renting.  In some cases, the cost of rent may even exceed that of a typical mortgage payment. When you rent, you don't build equity. (Click on the chart below)

When deciding to buy, job stability is a big factor.  If your job does not require frequent relocation and you plan to live in the home for at least 5-10 years, you may want to consider making the purchase.  If you need to relocate after that, you may have enough equity from the sale to use as a down payment on another home.

Home Buyer's Checklist 

If you can answer yes to the following questions, you may be ready for home ownership.  Your REALTOR® can help you to find the perfect home based on your individual needs.

Have you been steadily employed for at least one year, but preferably two years?

Do you plan to live in the home long enough to build equity?

Can you provide a down payment and still have enough money left to pay for closing costs, utilities and home furnishings?

Are you current on all debts, including auto loans, credit cards, etc.?

In addition to any current debts that you may have, can you afford a monthly mortgage payment which will likely include property taxes and insurance?

Do you have the time to devote to shopping for a home and comparing interest rates from various lenders?

Have you checked your credit reports for inaccuracies and disputed anything that needs correction with each of the three major credit reporting agencies?

The decision to buy or rent is a very personal one that can only be determined after a careful evaluation of your situation. A REALTOR® can show you the perfect home and a lender can tell you whether or not you can afford it, but it's up to you to make the choice as to whether or not you are ready to make the move.

To learn more about how to move from renting to home ownership, please visit my website at: www.valeriemcconville.com

If you have any questions about this or any of my previous articles, I invite you to leave your questions or comments. I look forward to hearing from you soon. 

Best wishes.

Valerie McConville

LATEST MARKET STATS

If you are thinking about getting into the real estate market this Spring, here are the latest stats from the REALTORs® Association of Edmonton.

Home prices rose slightly in March. Single family home prices lead the charge in pushing March's prices upward. But the market found some balance in April's prices.

The average single family home price dropped 3.5% in April, and the average price for a Condominium was down 1.3%. Duplexes and row houses were up 2.8% in April. The average single family home price in April was $402,270 while the average condominium price in April was $243,503. For a duplex or row house, the average price was $324, 975. Even with nearly 3.5% drop, prices in March shot up higher than most expected. Prices were still higher than April 2012.

So what do these stats say to the average seller or buyer? 1) Seller's are getting a price they can be happy with. 2) Buyer's are happy to see more balance with the market.

One final note, if you considering purchasing a new home this Spring and would like to know what the mortgage rates are as of May 10, 2013, here they are:

Banks: Range from 3.09% - 5.14% based on a 5-year term.

Trust Companies: 3.95% based on a 5-year term.

Other institutions: 2.84% -3.09% based on a 5-year term.

So if you are in the market for a new home, or looking to refinance your existing mortgage, then you will want to consider the option of hiring a mortgage broker rather than an individual lender or lending institution.

Mortgage brokers are financial professionals who match lenders and borrowers. They usually work with dozens of lenders as freelance agents and can match you with a lender than offers the best mortgage for your financial situation and personal needs. A mortgage broker is a one-stop mortgage option that can save you time, and most importantly, money.

To find out more about these market stats or about mortgage brokers, visit my website at www.valeriemcconville.com or give me a call at (780) 700-8638. I will happy to help you attain your goal of owning your own dream home.

BENEFITS OF HOME OWNERSHIP

The decision to purchase a home is exciting and a major investment for your future. Because there is only so much of it to go around, real estate is the top choice for many investors and the desire for most families.

This article is designed to highlight some of the many benefits of home ownership and how buying a home can often turn the American and Canadian dream into a reality.

One of the most profitable markets in real estate is rentals, which means that many families are paying to live in a home that isn't their own.  In some cases, renting a home is necessary.  For all others, the money that would be spent on rent could instead be used to pay a mortgage.  In fact, monthly rent payments often exceed that of a typical mortgage payment.  One of the greatest benefits of home ownership is putting money into something that you can call your own and knowing that the monthly payments are going toward your home's equity.

Speaking of equity, many properties experience a growth in value as more development moves into the area or the economy strengthens through an increase in job opportunities. If this happens, home values soar and owners can bask in the glory of their new found profit.  When you purchase a new car, it depreciates the moment that you drive off of the lot.  When you buy a home, however, it has the potential to appreciate year after year. There are few things in life that can offer you a return above and beyond your original purchase price, but a home can.

When you own a home, you will enjoy the freedom of decorating and making any changes that you choose without needing the permission of a landlord or property owner. In addition, you may even be able to use your home's equity to finance some needed improvements and/or repairs.  In some cases, these changes may even increase the value of your home.  An upgraded kitchen or bathroom, hardwood flooring or an additional room are examples of changes that could result in added value.

Another advantage of home ownership is the tax benefits that are available. In the United States, the interest paid on a home mortgage as well as most property taxes paid are tax deductible.  For additional information on deducting mortgage interest and property tax, consult the IRS or a tax professional. In Canada, there are also some tax benefits of home ownership. There is a first-time home buyers tax credit; medical expense tax credit; tax benefits that may apply when selling your home; provincial tax credits you can claim on your tax return; a home buyers plan; rental income and allowable expenses and the GST/HST rebate for new residential rental property; home expenses you can claim and how the harmonized sales tax (HST) will affect new home sales in Ontario and British Columbia. For additional information on these tax benefits, go to http://www.cra-arc.gc.ca/myhome/ or consult a tax professional.

In addition to providing yourself and your family with a feeling of stability and permanence, home ownership can also help strengthen your credit profile through timely mortgage payments and a steady financial history.

Finally, there is no better investment than owning your own home which will lead to a secure future for you and your family.

If you would like more information on how to achieve your home buying dreams, visit me at www.valeriemcconville.com or call me direct at (780) 700-8638 and let's get started!