Buy vs. Rent in san dimas, CA: Is Buying a $849,000 Home the Right Move?

As a mortgage loan officer, I often get asked the critical question: “Is it better to buy or rent in today’s market?” If you're eyeing a property in San Dimas, California, this decision can have a significant impact on your financial future. Today, let's break down a real-world scenario to help you make an informed choice.

Buying a Home in San Dimas

The Financial Breakdown

  • Purchase Price: $849,000
  • Down Payment (5%): $42,450
  • Loan Amount: $806,550
  • Interest Rate: 6.25%
  • APR: 6.397%
  • Loan Type: 95% conventional financing

Monthly Costs

  • Principal & Interest: $4,964 per month
  • Property Taxes: Approximately $885 per month (1.25% of home value)
  • Homeowners Insurance: Roughly $100 per month
  • Private Mortgage Insurance (PMI): Approximately $350 per month (since the down payment is less than 20%)

Total Monthly Payment:$6,299

Equity Growth Over 9 Years

  • Annual Appreciation Rate: 5.53%
  • Estimated Home Value After 9 Years: $1,374,372
  • Estimated Equity After 9 Years: $707,844 (considering both appreciation and mortgage principal payments)

Tax Benefits

  • Mortgage Interest Deduction: Significant, especially in the first few years.
  • Property Tax Deduction: Also deductible on your federal income taxes.

Long-Term Considerations

  • Total Mortgage Payments Over 9 Years: $681,708
  • Potential Equity: $707,844
  • Tax Savings: Significant due to mortgage interest and property tax deductions.
  • Protection Against Inflation: Your mortgage payment remains relatively stable, providing protection against rising rent prices.

Renting in San Dimas

The Financial Breakdown

  • Estimated Monthly Rent: $3,500 for a comparable property
  • Annual Rent Increase: 3%

Rent Costs Over 9 Years

  • First Year Rent: $3,500 per month
  • Total Rent Payments Over 9 Years: Approximately $424,500 (considering a 3% annual increase)

Equity and Ownership

  • Equity After 9 Years: $0
  • Tax Benefits: Minimal, as renting does not provide deductions for mortgage interest or property taxes.

Long-Term Considerations

  • No Ownership or Equity: Unlike buying, renting does not allow you to build equity or benefit from home appreciation.
  • Vulnerability to Rent Increases: Rent typically increases annually, making future costs unpredictable.
  • Flexibility: Renting provides more flexibility if you don’t plan to stay in the same location for a long time.

Buying vs. Renting

Buying:

  • Pros: Builds equity, potential for property appreciation, tax benefits, and protection against inflation.
  • Cons: Higher monthly payments, responsibility for maintenance, and potential for property value fluctuations.

Renting:

  • Pros: Lower monthly payments, no maintenance responsibilities, and greater flexibility.
  • Cons: No equity build-up, vulnerability to rent increases, and no tax benefits related to homeownership.


Conclusion: Should You Buy or Rent in San Dimas?

While renting may seem more affordable on a month-to-month basis, buying a home in San Dimas at $849,000 with the terms we’ve discussed can lead to substantial financial gains over the next 9 years. The key advantages of buying include building equity, gaining tax benefits, and protecting yourself against rent inflation.

Of course, homeownership also comes with responsibilities like maintenance costs and the risk of property value fluctuations. However, if you’re planning to stay in San Dimas for the long haul, buying could be a smart investment in your future.

If you’re ready to take the next step or need personalized advice, I’m here to help you navigate the mortgage process and make the best decision for your financial goals. Let’s get started on your path to homeownership!

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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