It does not cover damages due to wear and tear or typical usage for your home. Homeowners Insurance is a type of property insurance that covers damages to the interior or exterior of the home, personal assets inside the home, and any personal injuries that occur on the property. Property tax is generally calculated using the assessed value of your property and a tax rate that can be a combination of both municipal and provincial taxes. They are used by the provincial and municipal governments to pay for services such as libraries, local police, firefighting, education, and health care. Property Taxes are taxes that you have to pay if you own a home. If the home is part of a condo unit, then there are also condo fees. These include property tax and home insurance expenses. In addition to paying the mortgage and down payment, homeowners also have home ownership and maintenance fees. What are some other expenses for homeowners? Since Jack and Maggie hope to move to California in the next 3 years, they decide that renting is more cost-effective. The calculator also advises Jack and Maggie that buying will be better if they choose to stay longer than 3.17 years. Using the rent vs buy calculator, Jack and Maggie see that they will be paying $73,234 in total costs over the next 3 years if they choose to buy and $72,000 if they choose to rent. The property’s price will appreciate by 2% per year. They will also have to pay $11,300 in closing costs from buying and selling the home. If they buy a home, they will have to pay about $1,668 in property taxes, $1,000 in home insurance, and $5,700 in condo/maintenance fees each year. RBC offers them an interest rate of 2.95% for a mortgage with a 25 year amortization. With savings of $114K (20% of the purchase price), the couple are able to obtain a mortgage pre-approval with RBC. The price to purchase a property with similar characteristics is $570K. The average rent in Vancouver for 1 bed 1 bath is $2000. Should Jack and Maggie rent or buy a house in Vancouver? They are both very career driven and plan to move to California in the next 3 years. They are looking for a property with 1 bedroom and 1 bathroom. You can also tap into your home equity at very low interest rates using a mortgage refinancing or a Home Equity Line of Credit (HELOC).Ĭonsider this Scenario: Jack and Maggie are newlyweds looking for a place to stay in Vancouver, BC. If property prices in your area rise, you can benefit from the increase when you eventually sell your home. Long Term Investment: A home can be a long-term investment.These payments can help to keep you financially accountable when it comes to spending. Not only do you have to save up for a down payment, but you will also be required to pay mortgage payments every month. Better Saving Habits: Purchasing a home will help you build better saving habits and become more financially disciplined.To check how much rental income a rental property can generate for you, use WOWA’s Rental Property Calculator. The rent you collect can help you cover your mortgage payments. Rental Income: If you have spare rooms or suites in your new home, you can rent them out for extra income.If you own your home, you will almost always have the right to live in it. For example, the Landlord and Tenant Board in Ontario allows landlords to evict tenants if they are selling the property, using it for personal use, or renovating the property. No Evictions: If you rent, you are always at risk of being evicted.There are many advantages to buying a home, and these include: Your home has appreciated by $10,000 but your closing costs of $25,500 exceeds this value because you only bought the house for 1 year.īuying is generally recommended if you plan to reside in an area for a long period of time. You will pay closing costs of 5%, or $25,500. If we assume you buy a house for 1 year with the same 2% growth rate, then your house will be worth $510,000. You will have to pay closing costs of 5%, or $41,015, but because your property value has appreciated, it more than covers your closing costs. Assuming a 2% growth rate, after 25 years your home will be worth $820,303. The cost of selling a house a house consists of real estate agent commissions and legal fees while the closing costs for buyers consists of land transfer taxes and legal fees This is because the home value generally appreciates over time and the costs involved in buying/selling the house (approximately 5% of the property’s selling price) are spread out/amortized over a longer period of time. On balance, the longer you plan to stay, the more cost-efficient it will be to buy a house. The most important factor that you should consider when choosing to rent or buy a house is how long you think you will be staying in a certain area.
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