Renting a Home to Buying a Home, A Giant Step in the Right Direction

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If you’ve got a ton of questions about buying your first home, you’re not alone. Join @RBC_Canada and a panel of 5 experts for the #FirstHome Twitter chat, on June 5th at 9 pm, EST. Get answers to your most burning questions — and a chance to win RBC Visa Gift Cards!

For as long as I have been renting, which is 15 years give or take, I have felt like I was wasting my money. Putting out hundreds of dollars every- single-month, and only getting that month out of it. It has been a huge weight on my shoulders for years. Ever since our children were born, I’ve yearned to buy a home.

About 14 months ago, out of necessity, our family moved from an inexpensive rental duplex apartment, into a single dwelling home. A two story, 1000 square foot 87 year old character home that had been on the market for quite some time, but just didn’t sell. The owner needed to cover his expenses and decided to rent it out. Moving caused our rent to double as well as our heating expenses which left our savings account stagnant.

When we signed the lease on the house, we talked about possibly buying the house in the future. The homeowner wanted a family that would want to live here long term, and he found that with us. About 9 months later he approached us with decent terms to purchase it, and though all the numbers worked well, because of financial flaws in our past, we were declined for a mortgage.

It was suggested to us that if we wait 6 months, keep doing what we are doing, and try again, we would be in a better position to buy. So that is exactly what we did.

It has actually been 9 months since we last applied, and we are getting ready to do so again. I have been doing a lot of research into the costs involved in buying our home. As a first time buyer, there is a lot to take in. I was shocked at just how much is involved in the purchase of a home.

Can I afford to buy a house was my first question. When you’re going from renting to buying, there is a lot more to think about. What happens if the furnace breaks? What happens if the roof leaks? The what-ifs are endless. To help me understand if I am actually ready to buy, I took the RBC Home Buying Readiness Quiz. It was a simple profile of my saving habits, and I scored fairly well. I’m on my way!

My next step was the Rent or Buy Calculator. I have been paying very high rent every month, especially for my area. So much so that the same amount as a mortgage payment would allow me to buy a house more than $20,000 above the price of the home I am buying! I can’t help but feel as though I have lost out on a lot of equity by renting for so long.

As I venture into this new stage of our life, possibly becoming homeowners, I’m excited, yet scared to see how it will all turn out.

Disclaimer: This post content is sponsored by Royal Bank of Canada, however the views and opinions expressed herein represent my own and not those of Royal Bank of Canada or any other party and do not constitute financial, legal or other advice.

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Comments

  1. Kevin Ross says:

    I was sure that you had another post about buying a home and I am sure that I commented on it, so I apologize if this is a duplication of efforts, but I cannot find it!!!
    Though I am not a first time home buyer, I do have some concerns to share with those that are considering buying for the first time.
    It is a very valid point, to consider whether or not to buy in the first place. I have crunched the numbers many times and, when you consider all of the expenses surrounding home ownership, renting seems very attractive, but only if, while renting, you save the difference between your monthly rent and what you would have paid owning a home.
    In my opinion, you have to consider WHY you want to own a home. I am a firm believer that looking at home ownership from a financial point of view is not the right way to approach it. It is only recently (relatively speaking) that house values went ‘through the roof’. For years before, housing was meant to be shelter and a place to raise a family. Nobody was estimating the value of the home, for investment purposes. If one goes into home ownership with such a desire, it is often a recipe for disappointment. My opinion…
    As I said earlier, if you look at the financials, considering all of the expenses that owning a house incurs (property taxes, utilities, mortgage interest, etc.), I believe that renting and saving the balance, is the way to go.
    That said… the real plus I can see in owning a home (and the sole reason I own a home), is being the ‘master of your domain’. You can knock a wall down, if you want… you can blast the music (within reason), if you want… etc…
    Please… also be aware of Collateral Mortgages and the pitfalls surrounding them…
    http://canadamortgagenews.ca/2013/01/30/cbc-marketplace-exposes-tds-collateral-mortgage/

  2. We bought our first home almost 8 years ago (this august) it is a large expense, but one I am happy we made. We have finally started to see a decrease in our mortgae and we are mainly paying down principal now

  3. Cheryl (@loucheryl) says:

    Congrats on going from renting to buying a new home! I know it can be scary at first (speaking from experience) but in the long run, it’s great!

  4. Looking forward to big news when you finally become a home owner.

  5. Kevin Ross says:

    Be aware of the penalties charged by the Big Six Banks. Time to review is before you sign on the dotted line !!! http://www.thestar.com/business/personal_finance/2013/05/07/early_exit_from_closed_mortgage_can_cost_you_dearly_roseman.html

  6. Congrats on your move!

    I’ve taken the quiz online and realized that as a single person, there is NO possible way I could afford to own a home on my own. It’s incredibly depressing as I make a decent wage, but the price of houses are just too much for a single person to start out…

  7. Heidi C. says:

    I almost had a nervous breakdown when it came time to buy our first home but now that we are on our third one, it really is nice to be a “homeowner”! You will make mistakes, we all do, but do as much research as you can.

  8. Stephanie LaPlante says:

    I’ve lived and rented my house for over 20 years. I’m trying so hard to save and buy it. I don’t ever plan on moving.

  9. Victoria Ess says:

    I look forward to reading the post on when you become homeowners!

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