Buying vs Renting

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Why should Veterans and active duty military service members think about buying a house when they can just rent?

There are 8 good reasons to consider:

Because it’s probably cheaper then renting:  VA loans typically require no money down when purchasing a home.  When you rent, landlords usually want at least first and last month’s rent.  In addition, most, if not ALL of the closing costs can be covered in the loan, so that the Veteran or military member doesn’t have to come up with any money out of pocket when buying.  Example:  At a 4.5% interest rate, a $300,000 home would have a principal and interest payment of approximately $1,520, taxes of $312, and insurance of $75 = a total payment of $1,907 per month.

Earn $24,000 – $36,000 in one year, while you sleep:  USA Today printed an article in their Money section last November 11, 2013, where the National Association of Realtors predicts real estate prices to rise 6% in 2014.  On a $400,000 home, a 6% increase would be $24,000 per year, earned by just sleeping at night.  A $600,000 home could earn you $36,000.

Home prices are on the rise:  On January 20, 2014, the National Mortgage Professional Magazine states “home prices in Phoenix, Las Vegas and Los Angeles, appear to be continuing in a strong recovery with year-over-year growth in double digits.”  That means at least 10% per year.  On a $500,000 home, that could mean $50,000 per year of equity built.

Interest payments are at historic lows!   Get an incredible interest rate, locked for 30 years.

Interest deductions:  You get a tax write-off.  For example, if you paid $12,000 in mortgage interest in one year, and were at a 25% federal tax rate on your income, you may receive up to a $3,000 annual tax deduction.  The savings could be even more, depending on the size of the mortgage on your home.  You don’t get a mortgage tax write-off for renting a property.

Rising rents:  Rents in Los Angeles have jumped to an average of $1,435 per month.  (Santa Monica averages $2,328, Beverly Hills averages $1,996) and USC Casden reported that rents around Los Angeles are expected to rise 2% per year in 2014 and 2015.

Poor credit is not always an issue for vets to get a loan:  VA loans allow for Veterans and active duty military service members  to purchase a home with less than average credit scores.   Even if you think your credit is bad, it’s worth talking to a mortgage broker to see if you qualify.

Homeownership = Stability:  A place of your own to build future memories.

Have questions? Contact Matt Battaglia at http://mattforlending.com/