Why Renting Just Makes Cents!

Just over a decade ago, a year out of high school, I was a young, ambitious woman who made one of the biggest decisions someone can make in their adult life; I wanted to buy a house. I decided to postpone my plans to attend the University of Phoenix and take full advantage of a serious dip in the housing market. My downpayment was a pittance compared to what I would've had to shell out in this hot housing market. If you're reading this, and you live in the United States, you're probably wondering what the heck I'm talking about! Hot housing market..where?! I live in Canada, on the West Coast, in a city where the average house costs about $899,000USD. And if you're trying to work out downpayment calculation in your head, that's a hell of a lot, and not exactly attainable if you're a struggling student trying to make sense of a newly attained degree whilst trying to pay off crippling student loan debt.

I've since gone back to school, and for the last two years, and after selling my house years ago when the market was at its peak, I am now a happy renter. I have to say, if you asked me ten years ago, I never thought I'd utter those words, but the lifestyle that renting has afforded me, has far outweighed the responsibility of being chained to a mortgage. If you are on the cusp of making a decision about whether to buy a home or rent, here are some things you might want to consider:

Coming up with a downpayment. Depending on what type of property you're after, you have to come up with a considerable amount of money to secure your home. In some cases, it can be as much as 25% or as low as 5%, but either way, it's not the kind of money that most people have lying around. If you're a university student starting out in life, it's more important to focus on paying off your debts than to save for a downpayment.

Lengthy mortgage terms keep you locked in. Signing a mortgage document is a lot like getting married. You have made an agreement with the bank stating that you will be responsible for coming up with a substantial payment on a monthly basis for a set number of years until it's paid off. You don't have the luxury of giving notice, throwing your possessions in storage, and taking off for a year away (much like I did). You could always find tenants to occupy your property, but I promise you, it's not an easy process.

There's no landlord to call when something goes awry. If an appliance breaks, or the toilet floods, the only one who has the power to magically fix these problems is that stressed out individual you happen to be staring at in the mirror every morning. As a homeowner, you get to experience the joys of calling the $80 an hour plumber in the middle of the night when your basement is flooding. If you're a tenant, someone else is not only responsible, provided you didn't cause the issue, will provide the necessary professional and foot the bill!

Tips on Buying Your First Home

When I graduated from high school just over a decade ago, I only had one thing on my mind, buy a home. This would have been considered a fairly unusual goal for an 18 year old to work towards, but being a fairly mature young adult, I had already done a significant amount of research into renting versus purchasing. And though I lived in one of the most desirable cities, the condo market had cooled off significantly. It was a buyer's market, and I was on the hunt for some new digs. But way before I made the phone call to a real estate agent, I followed several steps that led me to successful home ownership.

1) Can I Afford This? An alarming number of people are so enamored with the idea of owning a home, they run off to the bank to get pre-approved for a mortgage well before they've had a good look at their budget to see if they can actually afford to take on a mortgage! Your paralegal salary may be enough to keep you in Jimmy Choos, but buying a home is so much more than mortgage payments! If you are contemplating home ownership, you owe it to yourself to work through your budget with a fine tooth comb, leaving absolutely no possible financial roadblock unexplored. After you've paid the rest of your expenses, tucked away some money for retirement, and some for savings, what's left? What's left is what you'll have to work with when you pay for your new home every month. If you don't have this number in the forefront of your mind, you leave yourself open for a rude awakening when the first mortgage payment hits.

2)  Getting Pre-approved. I've always thought of getting pre-approved similar to getting engaged! You go through all the planning of buying a home, but at the end of the day, you still need to close the deal! When you get pre-approved, the bank or lender is essentially letting you know how much you can spend on your new home. In Canada, a mortgage broker will generally calculate your down payment into this pre-approved figure.

3) Thoroughly explore mortgage options. There are any number of allotments of time given to pay off a mortgage. Here in Canada, home buyers generally opt for a 20 or 25 year mortgage. I believe in the USA, a standard mortgage is generally around 30 years. A financial adviser will not only help you determine the best amortization rate, but will explain the benefits and drawbacks of a fixed or variable (adjustable) mortgage. Knowing what you can spend helps narrow down your search, and immediately lets you know what neighbourhoods you can afford!

4) Shop for a real estate agent. Once you get pre-approved, and you're ready to hit the ground running, it's time to find an agent. This can be as tricky as finding a good lawyer! You want to find someone that you feel you can trust. The first thing I did when I started shopping for a new home, was ask friends and family, and found someone fabulous! Going with a larger agency like Remax or Century21 is beneficial because you gain access to individuals with vast property knowledge, and in many cases, specializations. For example, if you are looking at purchasing a property in a particular area, you'll want an agent who's going to know the in's and out's of that neighbourhood.

5) Understanding the offer process. There is nothing more exciting than finding the house of your dreams, but there's nothing more heartbreaking than watching it slip through your fingers as someone outbids you. There is some strategy to putting down an offer, if your real estate agent is good, they'll up your odds. Keep your cool, and for the sake of your health, always be prepared to walk away from the deal. There are hundreds of thousands of houses, and there's no reason to self-destruct financially. Be patient, and you'll get what you want.

The Benefits of Filing Your Taxes Early

Yes, it's only March, but the personal income tax deadline is approaching rather quickly. And it would seem that, despite the fact that most T4 forms or in the States, the W-2 form, are mailed out near the end of January or early February, most tax payers wait to the eleventh hour to file their taxes. Why is that? Believe it or not, there are some serious benefits to filing your taxes early.

1) The month's of January, February and March are much quieter, so whether you're dealing with the IRS or Revenue Canada, you won't run into excessive line-ups at the post-office. It was estimated that in 2010, up to 70% of tax payers were filing their taxes electronically, but that still leaves a whopping 30% who file their taxes through the mail. If you are standing in obscene post-office line-ups in the month of April, you run the risk of your taxes not being filed on time which can lead to penalties.

2) Filing early means you're not worrying about it for the first three months of the year! Listening to my friends complain of sleepless nights and stomach ulcers always made me scratch my head. Whether you owe money or not, why drag it out, and cause yourself more stress?

3) Reduce your risk of filing an inaccurate return! There are few things in life more stressful than a tax audit, and one of the top reasons that individuals or businesses are audited, is because someone has made an error during the filing process. If you are filing your tax return at the last minute, you are far more likely to make an error under the duress of a deadline, than if you were to file with a month or two of breathing room!

4) The faster you apply, if you are owed money, the faster you get your money! If you file early enough, you eliminate the temptation to get an "instant refund" from a third party that will take a huge junk out of your return. File early, beat the rush, and get every penny of your hard earned money to put back in your pocket!