Friday Final Reflection: June 23, 2017
Mortgage Week Concludes (A MUST READ)
Welcome back to my final reflection on the week as we conclude mortgage week in the world of Budget Boss. This week we went over a several home related topics including the pros and cons of home ownership versus renting. We also spoke about saving for a down payment, housing costs and the current climate of our housing market. Today to wrap the week up I am going to go over the key points to take away from Mortgage Week here at Budget Boss. There is a lot of information out there and you have to remember that not all of it is in your best interests. Here are some things to keep in mind when thinking about home ownership.
1) Renting is NOT a Waste of Money
There is a common myth out there stating that paying rent is a waste of money. That couldn’t be further from the truth. You pay rent in exchange for a place to live. You also pay it for the convenience of not having the pay property tax, maintenance fees, homeowners insurance and utilities in some cases. You trade your money for not having the hassle of home ownership and people need to realize that owning a home is a hassle. That doesn’t mean that it isn’t a worthwhile hassle. What it means is that home ownership isn’t a choice between spending money wisely and wasting it. Renters aren’t suckers, they had just made the choice to not own either out of preference or necessity. Choices should be made with all the information and decisions like buying a home should not be taken lightly. Don’t get down on yourself for renting and never feel the need to buy a home because your friends or family have.
2) The Down Payment is HUGE, in terms of priority
People need to start looking at the down payment for a house more as a measuring stick of your lifestyle. Saving for a down payment on a house seems like a very hard thing to do. In the list of life’s challenges, it is not even near the top. Think about all the other insanely difficult things you will have to do: Advance in your career, raise children, care for elderly parents, save for retirement, not kill people who bother you, and many other tough things. If you can’t save money for a few years to earn the right to home ownership then maybe buying a house isn’t for you. Think of the sacrifice needed as a lead up to the other challenges life will throw at you. You won’t be able to weasel your way out of them, so don’t try and weasel your way out of a healthy down payment. Plus you have to start learning to save sooner or later, might as well start with a house. If you have to turn around and sell the house soon after you buy it you don’t want to take a complete loss. Make sure you put a healthy amount as a down payment. Your future self will thank you.
3) Be ready for all the extra costs, and headaches
Going back to point one, people seem to think that owning a home is the same as renting, except with the equity. Wrong! On top of your mortgage payment, there is also home insurance, property tax, maintenance costs, larger utility bills, and many others. Don’t forget that when you buy a home you also have Land Transfer Tax, Realtors Fee’s, Lawyer Fee’s, and others. The whole process is designed to get as much of your money as possible. Make sure you are ready for that. That doesn’t even include the time commitment of upkeep around the house. I personally don’t have free time on weekend’s to mow the lawn but if you do then home ownership is for you. You have to think of all commitments when taking the plunge.
Here is the thing; I’m not trying to tell anyone not to buy a home. I think home ownership is one of the most amazing investments one can make. I think it also has challenges that need to be addressed. It requires a lot of dedication and hard work to be a homeowner and is not something that should be taken lightly. You can, however, do it the right way and have a rock solid investment that grows in value as you grow older. It is a dynamic piece of a sound investment portfolio but one that requires care and consideration.
Thanks for reading my final reflection on Mortgage Week here at Budget Boss. Tune in later today for my recap of this week’s events live on Facebook. Have a great weekend friends!
“Once you get the kids raised and the mortgage paid off and accomplish what you wanted to do in life, there’s a great feeling of: ‘Hey, I’m free as a bird.'” – Dick Van Dyke
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at budgetboss.ca.