For the first time home buyer buying a home seems like a daunting task. The flexibility of renting appears stress free, no real responsibility and a short term commitment. Who doesn’t love the sound of that?
The reality is, your monthly payments are investing in someone else’s future. I am sure at this point you are thinking, but buying a home just sounds expensive.
Well we are here to tell you that it really isn’t. If you don’t believe us, let’s just break it down for you.
The average house cost in our area is $239,900. After a scan of Kijiji, the average apartment price in our area is $959 a month (including studio apartments). Remember that number as you read through this article.
If the average house costs $239,900 here is the break down:
- Down Payment (based on 5% for first time home buyers): $11,995
- Amortization (how long you will take to pay it back): 25 years
- Mortgage Rate : 2.43%
- Your Total Monthly Payment: $1048
- Difference between the average rent and average mortgage: $89
The real difference is after 5 years you will have paid $36,594 towards your principal and if you’ve done it right your house will have gone up in value. That is $36k in your pocket instead of someone else’s. Doesn’t that have a nice ring to it?
We have used this handy calculator to figure out the cost to buy a home in our area. It will even tell you how much your average expenses will be every month. If you are considering purchasing your first home we highly encourage you play around with the calculator. An extra $89 a month isn’t that scary and you could have invested in your future and not someone else’s!