As a mortgage loan officer, one of the most common questions I get is whether it’s better to buy or rent in a particular area. If you’re considering purchasing a home in Whittier, California, and are weighing your options, let’s break down what buying vs. renting would look like for a $700,000 home over the next nine years, assuming a forecasted interest rate of 5.49% per year.
With a 5.49% interest rate on a $560,000 loan, your estimated monthly mortgage payment would be around $3,190 (principal and interest). Property taxes, homeowner’s insurance, and maintenance costs will add approximately $1,200 to $1,500 per month, bringing your total monthly housing cost to around $4,390 to $4,690.
Over nine years, you’ll be paying down your mortgage, with an increasing portion of your payments going towards principal rather than interest. After nine years, you could expect to have paid off approximately $91,000 of your principal. This means you would have built $231,000 in equity from your down payment and loan payments alone, assuming the home value remains constant.
While past performance isn’t a guarantee of future results, homes in Southern California have historically appreciated over time. If we assume a modest 3% annual appreciation, your $700,000 home could be worth approximately $914,000 in nine years. This would result in an additional $214,000 in equity, bringing your total potential equity to $445,000.
As a homeowner, you may be eligible for mortgage interest and property tax deductions, which could lower your taxable income. Depending on your tax bracket, this could result in significant savings over the years.
Starting with a rent of $3,500 per month, with an annual increase of 3%, your rent would rise to approximately $4,565 by the ninth year. Over nine years, you would spend approximately $437,000 on rent.
One of the key disadvantages of renting is that none of your monthly payments go towards building equity. While renting provides flexibility and fewer maintenance responsibilities, you won’t benefit from home value appreciation or the ability to sell for a profit.
Renters are not eligible for mortgage interest deductions or property tax deductions, meaning your tax liability remains the same.
Buying a Home:
Renting a Home:
Over nine years, buying a home in Whittier, California, could potentially save you hundreds of thousands of dollars compared to renting. While the upfront costs of purchasing are higher, the equity you build, combined with potential home appreciation, can make buying a far more financially advantageous option in the long run.
As always, it’s important to consider your personal financial situation, career stability, and long-term goals when deciding whether to buy or rent. If you’re ready to explore your options further, I’m here to help you navigate the process and secure the best possible mortgage for your new home in Whittier.
Ready to take the next step? Contact me today to discuss your mortgage options and make your homeownership dream a reality!
David Delgado
NMLS# 349079 • Freedom Choice Lending
Office: (562) 281-6163
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