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REMAX Realtron Realty Inc. Brokerage

Independently owned and operated

2815 Bathhurst Street, Toronto ON, M6B 3A4

Direct: 416-543-8852

Office: 416-782-8882

Toll Free Fax: 1-866-513-2193

Fax: 416-782-3329

The Proverbial Question: "To Buy or Not to Buy..."

August 23, 2010 - Updated: August 23, 2010

The proverbial question:  “To move now or wait until I save up …”

This is a question many of our clients ask.   Just recently, we heard from a prospective client who, 15 years ago, decided against buying a home in order to save up for more down payment.  Fifteen years later, he's still in the same position – still paying rent and not enough money saved up.  After sitting down with the family, he again retorted and said that maybe they’ll wait again and try to save up some more.  After gently reminding him that this was a déjà vu of a meeting we had 15 years ago (& 15 years of rent money going nowhere except to pay for the landlord’s mortgage & prices of homes almost doubling since then) he finally relented after some prodding and threats (yes, his daughter threatened that she would buy on her own).  We happily found the family a house that they can now call their own.

Here are some pros and cons presented in an article by Investor Education Fund:

SHOULD YOU WAIT AND BUILD UP A LARGE DOWN PAYMENT?

PROS:  

1.  You will pay less interest. 

2.  You can avoid paying for mortgage insurance.

3.   You reduce the risk of not being able to pay back the loan if the value of your home drops and you have to sell.

CONS:

1. You have to wait to own a home and you will pay more rent. 

2. You could have put that rent towards paying a mortgage, and owning more of your home faster.

3. You have to be disciplined or you could spend your savings on other things.

4.  In some areas, house prices may rise faster than you can save the down payment.

 

SHOULD YOU BUY EARLIER?

PROS:

1. You can stop paying rent sooner and get into a home faster. 

2. You have the chance to own more of

your  home sooner. 

3. You don’t risk house prices rising more than you can afford.

 CONS:

1. You will pay more interest.

2.You will have more worries if you take on more debt than you can handle. 

3.  If you have to sell and the value of your home drops, you may not be able to pay back the loan.

 

Buying a home is an important decision that a family has to discuss and seriously think about.  If anything, our only advice is….please don’t wait 15 years!!!


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