I did the math \u2013 and four years of paying rent for a shared apartment has added up to $22,000. That could have bought me 9,777 coffees at Tim Hortons \u2013 a coffee a day for almost 27 years!<\/p>\n
Just like cash spent on coffee, I\u2019ll never see that rent money again. And it brings me to the question of whether I\u2019m throwing my money away.<\/p>\n
As a soon-to-be university grad with, I\u2019m contemplating the next stage of my life and wondering when it\u2019ll be time to buy my own home.<\/p>\n
To find out, I pay a visit to my financial adviser. He asks me a lot of questions: are you working full-time? Where do you want to live? How much debt do you have? What\u2019s your timeline?<\/p>\n
Time for a timeline<\/span><\/p>\n Somehow, a timeline makes the hypothetical more realistic. And the realistic is far more expensive than I imagined.<\/p>\n The \u201creal\u201d costs go far beyond buying the property. There are lawyer\u2019s fees, moving costs, annual taxes, monthly utilities, mortgage payments and repairs. And then there are the knick-knacks and furniture.<\/p>\n Suddenly, my $22,000 in rent doesn\u2019t seem like all that much.<\/p>\n My advisor tells me it\u2019s easier to get a loan if I have a good credit rating. He explains a down payment of 20 per cent or more is ideal because a bigger down payment means creditors see me as less of a risk.<\/p>\n The advisor\u2019s advice: have a stable job for at least six months before inking a property deal.<\/p>\n So that\u2019s all good \u2013 but I feel like there\u2019s more I need to know. I look up Joel Gris\u00e9, a credit counselor with K3C Credit Counselling.<\/p>\n Gris\u00e9 agrees that having a 20 per cent down payment is nice, but it\u2019s also very difficult to put that kind of money together fresh out of university. An average home in Ottawa retails at about $300,000, and that means saving $60,000 before unpacking the coffee pot.<\/p>\n More than the minumum<\/span><\/p>\n Gris\u00e9 says when I do buy a house, I should make sure to make more than just the minimum monthly payments. Minimum payments only service the debt, in other words, pay the interest and fees \u2013 but don\u2019t actually help erode the principle \u2013 pay off my house.<\/p>\n \u201cAny debt you have, you want to start to see it come down rather than go up,\u201d Gris\u00e9 explains.<\/p>\n And remember those \u201creal\u201d costs of owning a home? Gris\u00e9 recommends budgeting at least $3,500 for annual property taxes and another $60 a month for property insurance.<\/p>\n Other costs that often get overlooked and add up to hundreds of dollars every month include heat, hydro, Internet and water bills. With all this to consider, Gris\u00e9 recommends any soon-to-be homebuyer meet with a credit counselor. It\u2019s usually a free service.<\/p>\n Other good advice: start saving early, and know how much you can actually afford to borrow when the time comes.<\/p>\n With a rough sense of how many dollars and cents it\u2019s going to take, I head over to Keller Williams Ottawa Realty to meet with broker Mike Hooper.<\/p>\n It turns out there are even more fees to consider: a homebuyer needs to pay a land transfer tax when signing for a property, along with insurance premiums to the Canada Mortgage and Housing Corporation if the down payment is less than 20 per cent \u2026 ah yes, that\u2019s why the advisors recommended a down payment of 20 per cent or more.<\/p>\n Hooper says a successful home buying experience involves getting help from real estate agents, mortgage brokers, lawyers and building inspectors.<\/p>\n Professional help helps<\/span><\/p>\n \u201cYou can avoid troubles if you get the right professionals involved at the start,\u201d Hooper says.<\/p>\n Those troubles include overpaying for a property or getting bad mortgage advice.<\/p>\n \u201cSometimes people are just a little too excited about the house they are getting to spend a bit of time [consulting professionals],\u201d Hooper says.<\/p>\n A home inspection runs between $400 and $600, which Hooper says is \u201creally a drop in the bucket to do some due diligence when you\u2019re considering the biggest purchase you\u2019ve ever made.\u201d<\/p>\n Overall, budget around two per cent of the value of the property to cover closing costs.<\/p>\n Borrow, or save first? Hooper says that if house values are increasing faster than the cost of borrowing, take out a loan.<\/p>\n For now, I\u2019m going keep renting. But perhaps someday soon when my circumstances allow, I\u2019ll be enchanted by the chance to call my home my own.<\/p>\n Buying a home is a big decision \u2013 almost as big a decision as whether to kick this coffee habit to the curb before it costs me $22,000 over then next 27 years.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" I did the math \u2013 and four years of paying rent for a shared apartment has added up to $22,000.<\/p>\n","protected":false},"author":40,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,8],"tags":[],"class_list":["post-2727","post","type-post","status-publish","format-standard","hentry","category-news","category-personal-finance-2012"],"_links":{"self":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2727","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/users\/40"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2727"}],"version-history":[{"count":15,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2727\/revisions"}],"predecessor-version":[{"id":4454,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2727\/revisions\/4454"}],"wp:attachment":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2727"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2727"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2727"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}