A home is one of the biggest financial commitments most of us will ever make — so it’s understandable that we might get a little stressed over what seems like a straightforward question:

Should I rent or buy?

To try and ease that anxiety, we spoke with a mortgage expert and a certified financial planner to get their take on when buying a home is in your best interest.

While there’s no universal “right” answer, start your decision process by asking yourself these five questions:

1. Can you afford it?

Having the money for a down payment is only the first step. Next, you need to make sure you can afford to pay your mortgage … and costs like utilities, maintenance, furniture, taxes, and inevitable surprise costs like emergency replacement of the broken boiler.

“Understand what you’re getting into,” says certified financial planner Mary Beth Storjohann of Workable Wealth. “You have to be able to afford to purchase and maintain the property, and expect that your bills will change on a monthly basis.”

Plus, she points out, you’ll need to be able to pay all of the fees during the buying process. “The best thing you can do is educate yourself,” she advises. “If you don’t do your research, making the wrong decision to buy could really set you back financially.”

Rent if: You don’t have the money saved to buy and carry a home.

Buy if: You’ll have the cash to cover the initial transaction, plus the ongoing costs of homeownership.

2. Are you financially secure?

To be in a financial position that’s secure enough to responsibly to buy a home, explainsMortgage Hippo CEO Valentin Saportas, you need:

  • Decent credit (“You don’t need perfect credit or even good credit,” he says, “but generally above 620 you can qualify for a conventional loan.”)
  • A stable income
  • Moderate liabilities
  • Enough cash on hand to cover down payment and closing costs
  • Liquid assets as financial reserves
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When Saportas says “financial reserves,” he’s talking about an emergency fund. It’s not a good idea to scrounge every penny from each of your accounts for a down payment, leaving yourself without a safety net for an emergency or hobbling your retirement savings.

“I wouldn’t recommend that someone without an emergency fund buy a house,” cautions Storjohann. “It really sets you up for trouble when you wipe out your savings to reach this goal and don’t have any money set aside.”

Rent if: You can’t check off one or more of the above bullet points, or if buying would completely wipe out your savings.

Buy if: You’re financially secure outside of your home savings.

3. What are your other financial goals?

While buying a home is a major financial accomplishment, it’s unlikely that it’s the only one you ever intend to make. Storjohann remembers a client and her husband who were “really gung-ho on buying their first home.” But after getting a financial plan and seeing exactly how much money they would need to lay out, they decided to postpone their purchase for another few years in order to finance their other financial goals, like starting a business.

“It’s all about breaking it down into steps, and getting clear on the numbers,” says Storjohann. “If you have any major life transitions coming up, you may want to hold off and see what happens.” How will your home purchase affect your pursuit of your other financial goals?

Rent if: You’re currently prioritizing other financial goals above homeownership.

Buy if: Homeownership is your primary financial goal, and you’re both aware of and comfortable with how the cost will affect your progress towards your other goals.

4. Are you willing to be the super?

This isn’t a financial question, but a lifestyle one: If the sink springs a leak, the yard needs to be mowed, the door handle breaks, who deals with it? It won’t be your landlord or super, Storjohann points out, so either you’ll need to DIY or find the cash to hire someone.

Rent if: You want someone else to step in when things get complicated around the house.

Buy if: You don’t mind dealing with the increased chores that come with being your own landlord.

5. Where do you see yourself in the near future?

Different experts have different estimates, but generally, it’s recommended that a homebuyer spend at least four to five years in a home to offset the costs of buying.

But aside from the numbers, “buying a home is as much an emotional decision as it is a financial one,” says Saportas. “Of course, you must crunch the numbers to determine whether buying makes financial sense, but it’s just as important to feel that you’re in a place in your life where buying just makes sense. It’s no coincidence that most people seriously start considering buying a home when they get married and are comfortable with the idea of settling down and raising a family.”

Rent if: You’re unsure where you’ll be in the near future.

Buy if: You expect to be in the same place for a few years and want to own your home.

The latest numbers from Teranet and the National Bank of Canada are a bit of mixed bag. In May, the Teranet-National Bank National Composite House Price Index rose 0.8 per cent from April. Though the month-to-month boost was fairly robust, especially when you compare it to theweaker-than-expected April and flatlining prices in March, it was the fifth smallest increase for May in the 16 years covered by the index.

While the countrywide composite index reached an all-time high, just three of the 11 metros surveyed hit similar heights. Prices were up from April in seven markets and by more than the national average in five of the cities.

Halifax hit their largest monthly gain in their history, with the index rising by 3.1 per cent. As far as new records are concerned, Calgary’s 1.1 per cent growth was the fourth time in row their increase was more than 1 per cent, a move that took their prices to a new high. Toronto, which saw a 1.3 per cent boost, also broke pricing records, as did Hamilton, which recorded a 3.1 per cent jump.

Quebec City beat the national average with a month-to-month increase of 1.6 per cent. Though they didn’t beat the composite index for the country, Edmonton and Montreal still saw increases with the index rising by 0.6 and 0.5 per cent, respectively. Prices were unchanged in Ottawa-Gatineau and Vancouver, ended 12 consecutive months of rising prices, with zero month-to-month growth. Prices were down by 0.1 per cent in Victoria and 0. 3 per cent in Winnipeg.

Year-over-year, the composite index rose 4.6 per cent, with the biggest gains measured in Calgary (8.7 per cent), Vancouver (8.2 per cent), Toronto (6 per cent) and Hamilton (5.9 per cent).

For more details, check out the table below:

Teranet May 2014

Source : BuzzBuzzHome.com

Photo: Jocelyn Durston/Flickr

Nation-wide, rental prices didn’t see much of a change between April 2013 and April 2014, but the numbers vary greatly from province to province, with Prairie cities clearly on the rise.

The newly released Spring Rental Market Survey from the Canada Mortgage and Housing Corporation (CMHC) pinpointed the average rental cost for a two-bedroom apartment at $930 a month in April 2014. It was a 2.1 per cent increase from the same time last year. The two-bedroom price is an industry standard and the CMHC’s numbers take into account the prices for purpose-built apartments (as opposed to rental condos) with three or more units across 35 major Canadian metros.

How do different parts of the country compare? Vancouver took the top spot for highest rental price for a two-bedroom apartment at $1,274 per month, a 1.5 per cent increase from April 2013. Calgary followed close behind, but it’s year-over-year rise was more significant: the average rose 5.4 per cent to $1,267.

Edmonton prices have also climbed steeply since last spring. The average rent for a two-bedroom apartment rose 9.6 per cent, from $1,077 to $1,180. In other words, renters are paying, on average, about $100 more this year than they were last year. Plus there are fewer rules to keep rising prices in check. Unlike Ontario, PEI, British Columbia and Manitoba, Alberta doesn’t have rent control for tenants.

The average vacancy rate across the 35 major centres was 2.7 per cent, unchanged from the year before. It was a different story in Alberta, where both Edmonton and Calgary saw tighter market conditions with a vacancy rate of 1.4 per cent each. Kelowna wasn’t far behind at 1.5 per cent.

Other major Canadian cities weren’t that far behind. Toronto’s vacancy rate reached 1.9 per cent in April 2014 and Vancouver’s rate was 1.8 per cent.