Let us start by saying buying a home does not replace RRSPs, investments and all that magic stuff the bank can do with your money to make it multiple; so, you can retire in Phoenix like everyone else in Edmonton. You will make fantastic gains owning opposed to renting however, it is important to have a diverse financial profile.
So why should you buy a home NOW opposed to later when you are more “ready. Very simplistically, it is for these 3 reasons:
- Equity: The sooner you start the sooner you build up your “nest egg”. Cue google search for nest egg: “A sum of money saved for the future.” How you ask will buying a home increase your wealth when it is so darn expensive? Equity! In 20- 25 years you will have no mortgage! People who have achieved this say it is an exciting part of their life, letting them retire stress-free with a beautiful tangible asset. On this note, if you wait 5 years until a “better time to buy” you will miss out on $43,983 in equity you will build up by getting into the home of your dreams today.
- Use your investment: You get to live in an enjoy your investment. In your new home, you get to see every day where your money has gone – unlike in an investment saving profile (which again, is a good idea). That money is not accessible until you are done working. Which for a millennial is a long time! So you might as well make an investment with a large immediate payout – shelter (& a beautiful one!)
- Interest Rates: Interest rates are LOW, sadly, they will not stay there. You can get interest rates for a 5-year fixed mortgage at 3.5% or even lower! The interest rates right now from a historical standpoint are exceptionally low and are projected to go up in the near future. So back to that nest egg – if you build a new home now you score an awesome interest rate.
At City Homes, we know that with current mortgage application rules it can be tough, and saving for a down payment?! What savings!? We get it. That part is tricky, so we recommend sitting down with a financial planner or mortgage specialist and working out a plan to get you into a home opposed to paying off someone else’s mortgage. The reality for many Edmontonians’ is starting in a lower square footage duplex or townhome. While that is not always the case it is good to know that there are options in the market that are excellent quality and will still fit into your budget. If you have any questions, drop a comment – we would love to hear from you!
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