Should We Rent or Buy a House

Executive Summary

This paper focuses on whether one should rent or buy a house. Buying a home holds many advantages, the first advantage is that buying a house is a good long term investment. The monthly payment you are obligated to save every month and, after 20 or 30 years, will own an asset that is worth much money as the any fees or rents will not be pasd and, if necessary, you can use to fund your retirement home or other major expense. Besides it, the mortgage payments show less money in relation to rise in the cost of living, while rents are updated annually with the CPI, and the cost of living incresaes when you have to renegotiate the contract and sign another contract. Finally, pay a mortgage entitles you to significant tax deductions, which also tenants to enjoy deductions.

Should We Rent or Buy a House

Introduction

Currently, in the Greater Moncton, a home sells on average $ 90 000. It should be an upfront payment of 5% or $ 4 500. Most financial institutions require the approval of the CMHC when making a down payment of 5% and this process costs $ 3 200. This amount is usually added to the mortgage which gives a total of $ 88 700. Mortgage interest rates are currently 6.5% for a period of 5 years. This equates to monthly payments of $ 656.82 for 20 years, provided the mortgage interest rate does not increase after 5 years. It is observe that most of the new buyers are sticking to these calculations as they are impatient. Every day, our resident managers receive inquiries about ads of financial institutions providing assistance for the purchase of houses, prefabricated houses or condominiums. For that reason, it can be said that it is cheaper to rent than to buy a home in order to invest for the future (www.getrichslowly).

Costs Associated With Purchasing

The study is related to the concern that whether to buy or rent the house. There are several advantages and disadvantages to both choices, some arguments are qualitative and others quantitative. There are ways to calculate in a given period if it is financially good to buy or rent. In addition to this, many will have the spontaneous effect to say that rent is a waste of money and a mortgage payment is more advantageous because it is a payment to obtain an asset. It is important to consider the argument that almost half of what is paid in mortgage is the interest to banks. At the end of the period, these bank interest accrued nearly the whole capital; although many believe that paying rent is a waste of money, the acquisition of a home also requires similar costs such as bank interest, the services of a notary, the welcome tax, municipal taxes and fees condos. Look more in detail the facts. Here are other costs that must be paid on the purchase:

Legal fees - $ 575 disbursements - $ 200 and the land transfer tax - $ 225, ...