Buy vs. Rent in la puente, CA: Is Buying a $650,000 Home the Right Move?

If you're considering purchasing a home in La Puente, California, you might be weighing the benefits of buying versus renting. With a purchase price of $650,000 and an estimated interest rate of 6.25%, let's explore the financial implications over the next nine years. I’ll guide you through this comparison, taking into account a forecasted annual appreciation rate of 5.49% for La Puente.

The Costs of Buying

When you purchase a home with 95% conventional financing, your down payment would be $32,500 (5% of the purchase price). The loan amount would be $617,500. Here’s a breakdown of your financial commitments over the next nine years:

  1. Monthly Mortgage Payments:
    • Principal and Interest: With an estimated interest rate of 6.25% and a loan amount of $617,500, your monthly mortgage payment would be approximately $3,805.
    • Property Taxes: Assuming a property tax rate of 1.25%, you’d pay around $678 per month.
    • Homeowners Insurance: Estimated at $100 per month.
    • Total Monthly Housing Costs: $4,583.
  2. Initial Costs:
    • Down Payment: $32,500.
    • Closing Costs: Typically around 2-3% of the purchase price, approximately $13,000 - $19,500.
  3. Appreciation:
    • Over nine years, with an annual appreciation rate of 5.49%, the value of your home could grow from $650,000 to approximately $1,038,928.
  4. Equity Accumulation:
    • By year nine, you will have paid down a significant portion of your mortgage. Combined with home appreciation, your equity could be around $481,428.
  5. Tax Benefits:
    • You may benefit from mortgage interest deductions and property tax deductions, which could reduce your taxable income.

The Costs of Renting

Now, let’s compare these figures to renting over the same period.

  1. Monthly Rent:
    • Assume the rent for a similar home in La Puente starts at $2,500 per month and increases by 3% annually.
    • In nine years, you could be paying approximately $3,200 per month.
  2. Total Rent Paid Over 9 Years:
    • Over nine years, you would have paid approximately $331,000 in rent, with no equity or ownership stake to show for it.

Financial Summary Over 9 Years

  • Buying:
    • Total Housing Costs (Mortgage, Taxes, Insurance): ~$494,964.
    • Home Value After 9 Years: ~$1,038,928.
    • Mortgage Balance After 9 Years: ~$557,500.
    • Equity Accumulated: ~$481,428.
  • Renting:
    • Total Rent Paid: ~$331,000.
    • Equity Accumulated: $0.


Conclusion: Should You Buy or Rent in La Puente?

If you plan to stay in La Puente for the long term, buying a home could be a financially sound decision. While your monthly costs as a homeowner would be higher than renting initially, the appreciation and equity accumulation over time could significantly outweigh the total costs of renting. After nine years, you could have substantial equity, which could be leveraged for future financial opportunities.

As a mortgage loan officer, I recommend considering your long-term goals and the stability that homeownership can provide. If you’re ready to take the next step, I’m here to help you navigate the mortgage process and secure your dream home in La Puente.

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.


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