By Sarah A. Colucci, Oct. 24, 2017 1:00p.m.
A home has a lot of significance. In a sense, it's a safe haven. It's a place that offers stability for all who inhabit it. A place that houses memories. The value of real estate in today's world is little disputed.
Some people claim renting is better than owning. Alex Avery, a financial analyst for CIBC, says renting is better. In his book, "Rent, Don't Buy," he argues it's possible for renters to gain wealth. His method? Paying yourself fixed savings. Similar to other "renter advocates", he owns his home.
Is a mortgage a bad thing? A mortgage is a debt. It's related to the thought of working hard to pay off. Our parents told us how hard having a mortgage is. We don't want to be slaves to our homes, do we?
By contrast, however, most people who rent, work to pay off their landlord's mortgage. It's like having an interest-only loan that doesn't mature. I say this because nothing you pay in rent ever goes towards principal. At the end of your lease, you don't own any shares in the property you lived in. Unless you've managed to save a significant amount of money, renting hardly seems like the better option (if you have the choice).
Owning a home has its liabilities. As a renter, you don't have to pay property taxes or fix the roof. If the washer breaks, you don't have to pay to repair it. Statistics show, however, most people renting don't have forced savings.
Owning with a mortgage? Benefits of paying your mortgage include payments towards principal. Your share of home ownership increases as time goes on through equity.
Equity can increase in two ways:
1. Paying your mortgage.
2. Market's inflation
Your home can be a financial tool. You can take part in other investments as your equity increases. You can use equity to purchase other property. You can buy a cottage. You can refinance to put your children through school. Your home provides increased opportunities to accomplish other milestones.
It is better to have a piece of a pie, than to not to even have a crumb.
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By: Sarah Colucci
Senior Mortgage Agent, Lic. M14000929