To Buy or Not To Buy?: That is the Question
Although not as existential as Hamlet’s query, this is a life changing decision facing many Californians today. Ultimately, the answer depends on several real-life factors: your finances, your long-term plans and the real estate market in your area. Some of the questions you might want to ask include:
- What can you afford?
- How much do you have for a down payment?
- How long do you plan to stay in the house?
- Are you looking for stability or flexibility?
- Do you want to be responsible for maintenance and repairs?
- What are your financial, career and family goals?
Of course, the other choice you have is to continue renting. A wise next step in your decision-making will include a Pros & Cons List of renting vs. buying. It can look something like this:
- Builds equity and credit
- More stability (especially with schools)
- Some tax benefits
- Can “nest”, improving or upgrading to your tastes
- Social benefits of a stable neighborhood
- Requires substantial money, paperwork upfront
- Additional expenses beyond mortgage payment
- Responsible for repairs and maintenance
- Moving costs
- Fewer upfront costs
- Not responsible for maintenance/repairs
- No property tax bills
- Landlord can raise rent or sell the property
- Choices may be limited
- Might mean moving several times
- Don’t build equity
- No tax benefits
To summarize: Homes typically increase in value (approximately 7.2% in California in 2017) thereby increasing your retirement fund, whereas, every penny spent on rent is gone forever. Your homeowner costs are more predictable and stable than renters’ expenses, since a landlord can raise your rent in accordance with the rent control laws in your city every year. If you own a portion of your mortgage, interest and property tax is deductible. There may be a small renters’ deduction if you rent.
To help evaluate your choices regarding buying/renting there is a helpful calculator available on Zillow: https://www.zillow.com/rent-vs-buy-calculator/
When you reach the decision to buy, but find you do not qualify for a conventional loan, you need a fast loan or stronger offer over others, Sun Pacific Mortgage will be here to help you achieve your dream! We have unique alternative financing options through our Hard Money lending programs.
Call us at 707-523-2099!