“I want to own my own home, but … is this the right fit for me?”

With mortgage rates low and mortgage ads popping up everywhere maybe this is the year when you move from being a renter to a homeowner. But how do you know if this is the right fit for you? There are pros and cons to both renting and homeownership and it is up to you to make sure you have considered everything.

Homeownership is a big step for anyone and this may not be the best time to jump in with both feet and your eyes closed. Take the time to consider everything before you start the process of looking for a house. By the time you have started house hunting you need to be grounded in your decision so you can protect yourself from being swept away by the emotional current. Time to take out a blank piece of paper and start listing the pros and cons of each.

Renting – What to think about…

Renting comes with a fair amount of freedom in terms of mobility and finances. You can leave at the end of your lease and you are unlikely to have responsibility for any of the financial burden related to maintenance, house insurance or taxes. Additionally, should your financial circumstances change you have the ability to move and decrease your rental expense. Utilities may be included in the monthly rental fee. Dependent on the property extra amenities like fitness centers, pools and other public spaces may be included in your lease. On the downside you usually do not have the freedom to make changes to your home and may have restrictions on pets, the number of people and noise. Further the rent you are paying is a productive investment for the landlord and not yourself.

Homeownership – Consider this…

Your home is your castle and you have the freedom to do pretty much anything as long as you honour neighborhood and municipal covenants and bylaws. Your mortgage payments can sometimes be lower than rent and each payment builds equity into your home. This is the good type of debt. As a homeowner you may be eligible for government rebate programs and tax benefits. Homeownership also can mean a better credit score the next time you apply for a loan. But there are disadvantages as well, all the things you were not liable for as a renter you are now responsible for as a homeowner. This includes home insurance, liability insurance, taxes, maintenance and any damage to a neighbour’s property if it stems from your property. Things like maintenance mean not only money but time. Finally, regardless of your financial situation you have the responsibility of making your mortgage payments or risk losing your home.

Then there are more personal things you need to consider. How financially stable are you? Is your job stable? Do you have the proper financial management skills to handle all the expenses associated with owning a home? If you love the neighbourhood where you are currently renting does the possibility exist for you to purchase a home in the area? Can you afford to stay in the neighbourhood? Do you need to live close to school or work? Does your lifestyle support homeownership?

Once you have filled out all the pros and cons go through them and figure out which ones are most important to you. This is a big decision. Once you have decided that homeownership is something you are interested in, it’s time to think about the financial side of the decision. This is where the financial advocates at your credit union come in. Give us a call, send an email or drop into the branch – we C.U. so you can meet your goals.