Buy vs. Rent in La Mirada, CA: A Mortgage Loan Officer’s Perspective

When considering a home purchase in La Mirada, California, prospective buyers often face the pivotal question: Is it better to buy or rent? With the median home price around $768,777 and interest rates hovering at 6.25%, it's crucial to weigh the financial implications of both options over the long term.

The Cost of Renting

Renting a home in La Mirada offers flexibility and lower upfront costs. However, the main drawback is that you are not building equity. Let's break down the expected costs over nine years:

• Initial Monthly Rent: Assuming a monthly rent of $3,500 (which is typical for homes in this price range).
• Rent Increase: Typically, rent can increase by about 3% annually. Over nine years, your monthly rent could increase to around $4,563.
• Total Rent Paid Over 9 Years: Approximately $457,000.

The Cost of Buying

Now, let's explore the financial impact of purchasing the same home:

• Initial Costs: With a 20% down payment of $153,755, the loan amount would be $615,022.
• Monthly Mortgage Payments: At a 6.25% interest rate on a 30-year fixed-rate mortgage, your monthly payment would be around $3,785 (excluding property taxes, insurance, and maintenance).
• Property Taxes and Insurance: La Mirada has an average property tax rate of around 1.1%, adding about $8,456 annually. Homeowner's insurance might cost approximately $1,200 per year.
• Home Maintenance: Budgeting around 1% of the home’s value annually, maintenance costs would be about $7,688 per year.

Total Costs Over 9 Years:

• Mortgage Payments: $408,060
• Property Taxes: $76,104
• Insurance: $10,800
• Maintenance: $69,192

Total Costs: Approximately $564,156

Home Appreciation in La Mirada

One of the biggest advantages of buying is the potential for home appreciation. La Mirada's forecasted annual appreciation rate is 5.53%. Here's how that could play out:

• Home Value After 9 Years: $1,255,490

Your equity (home value minus remaining mortgage balance) would be substantial. After nine years, you could potentially have around $640,000 in equity, depending on the exact loan balance.

Comparing the Two

• Renting: You spend around $457,000 with no equity built.
• Buying: You spend around $564,156 but could build equity of approximately $640,000.

Conclusion

While the upfront and ongoing costs of buying a home are higher, the long-term financial benefits can outweigh renting. In La Mirada, with strong home appreciation, buying allows you to build significant equity over nine years. Renting, while flexible, leaves you without an asset to show for your payments.

As a mortgage loan officer, I encourage my clients to consider not just the immediate costs but the long-term wealth-building potential that comes with homeownership, especially in a growing market like La Mirada.

David Delgado

NMLS# 349079 • Freedom Choice Lending

Office: (562) 281-6163

www.FreedomChoiceLending.com

Click Here To schedule a 15 minute loan consultation

The terms are based on 6.379% APR.