Although the thought of paying a mortgage is more enticing than paying rent, it’s important to understand all the costs involved in buying and owning a home as you determine whether you can afford to join the ranks of homeowners.
Potential buyers sometimes forget to factor in the down payment, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in. The good thing about this is that if you get through the Edmonton real estate listings you can see these details and have various home options.
There are factors that you need to rethink when planning to invest on your own house. You have to determine the property value of homes that interest you. Next, you have to review different mortgage loan types and compare their required down payment amounts to the money you have available. Down payments, based on a percentage of the value of the property and determined by the type of mortgage you select, typically range from three to 20 percent of the property value. Don’t forget to factor in private mortgage insurance, a policy that allows mortgage lenders to recover part of their financial losses if a borrower fails to full re-pay a loan
One thing about buying your own place is the Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.5 percent of the purchase price of your home.
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce or creatively fund your down payment which can come from a variety of resources. Check with your realtor or lender to find out what’s available. In your final analysis of whether you can afford to buy a home, you’ll want to weigh the costs with the financial benefits and the all-important appreciation factor is the rate of increase in a home’s value. At end of the day, the biggest benefit of it all would be is having a place to call your own. Nothing is sweeter than investing your hard earned money on something that is bound to last a lifetime plus the advantage of the promise of greater returns as it value continues to appreciate through time.