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There
are many things to consider in making a decision
to buy a home. If you agree with some or all of
the following statements, you will probably want
to read on:
"Generally, I have the self-control needed
to save money"
"I'm ready to make a commitment to a stable
lifestyle where I will be able to support the investment
of a home."
"My credit rating is in good standing and I
use credit wisely."
"I am interested in improving my family's quality
of life."
"Pride of ownership is important to me and
I would enjoy the challenges in improving my scope
of knowledge."
Agreeing with these statements does not necessarily
mean you should rush out and buy a home. After all,
you may believe that living in rented accommodation
and buying mutual funds is just as good an investment.
Furthermore, you may think this is not the time
to enter the real estate market. Let me address
each issue in turn.
Let's first compare two couples named the 'Renters'
and the 'Owners'. The 'Renters' rent a home for
$750 a month and the rent increases 5% each year.
After 25 years they will be paying $2400 per month
and they will have paid $430,000 in total with nothing
to show for their accommodation expenditures.
On the other hand, the 'Owners' buy a home for
$145,000 and, on average, it appreciates 5% per
year. At the end of the same 25 years the 'Owners'
will have a property worth $470,000 and no mortgage.
Now a mutual fund salesperson would likely argue
that he or she could compete with this situation,
but a good REALTOR® would inevitably want
to draw your attention to "leveraging"
and your ability to increase your financial position
many times over (i.e., by putting down 5 to 10%
but getting 5% appreciation on the full $145,000).
In addition, by opting for a better payment schedule
you could pay your mortgage off several years
quicker i.e., with bi-weekly payments. Would you
agree that this sounds attractive?
As for the right time to enter the real estate
market, if anyone knew that they would be worth
their weight in gold, or perhaps even platinum!
The right time to enter the real estate market
varies from person to person and is not necessarily
driven by national or local economic conditions,
or seasonal swings in the market place. The right
time to buy depends on two criteria; first, when
you have made the commitment to stop paying for
accommodation and to start investing in your future
and, second, when you have found a home that you
can truly afford and that meets your present needs.
While owning a home is a common goal for most
Canadians, the timing is different for everyone.
You will know when the time is right and, in the
meantime, keep educating yourself for your future
purchase.
David
Weir BA, CD is a Broker with Royal LePage ProAlliance
Realty in Trenton. He has been the top-producing
office REALTOR® since 2001 and his sales in
this area have ranked him in the top 1% of Royal
LePage REALTORS® nationwide from 2005 - 2007.
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