Renting vs. Buying in the Bay Area
Renting vs. Buying in the Bay Area
If you’ve been renting in California, you’ve probably already heard that it would be cheaper to buy. People do love to give advice about homeownership, including the importance of building equity. But does the math always work out? It’s complicated, and for some people renting is still going to be the preferred choice over buying. But if you’re planning to stay in the Bay area and tired of paying high rent, you could be investing that money into your own home instead. Building roots can be important, and that’s what buying a California home can do for you. Here are some things it’ll be important to consider when you decide to buy or continue renting in and around the Silicon Valley area.
The Costs of Buying Versus Renting
Costs are inevitable with either decision. What matters is how those costs are broken down and how they interplay with your specific situation and income. For example, if you are renting, rent will cover your cost and the maintenance of your apartment whenever an issue arises. If something breaks, you call your landlord and the issue is resolved, as long as your landlord is attentive and active in the process. There are other costs covered in living in an apartment, such as the maintenance of outdoor spaces.
When you own a home, these costs are always in addition to your mortgage payment. If you have a leak in your roof or your dishwasher is on the fritz, you will be need to fix it or pay to have it fixed. Regular maintenance of your home and yard will also be factored into the cost. You can mitigate some of this by choosing to live in a condo association, but there are generally large condo fees associated with that situation as well.
Realtor.com offers a tool so you can compare home prices and rent in your area to help you determine whether it’s more cost effective to buy or rent in San Francisco or the surrounding counties.
Your Savings and Buying Plan
It’s a common concern for many first-time homebuyers that they don’t have enough of a robust savings plan in place to allow them to buy a home. While financial stability is a factor in the ability to get a mortgage, it isn’t the only thing that lenders look at in the process.
Saving money is only a portion. Other things include:
- Debt to income ratio
- Job stability
Once you have been approved for a mortgage, you can begin the fun part of looking at Bay area homes to find the right opportunity in your price range to give you what you’re looking for in terms of features and location.
Building Security, Not Equity
When people talk to you about owning your own home, they often use the words “building equity.” While it’s a good thing to build equity, it isn’t the complete picture. If you only view your home as an investment, you may be missing out on other important aspects of home ownership. While you hope that your home gains value over time, it should also provide you a good living experience throughout the time you own it. Enjoy your home and build your security, your lifestyle, and your quality of life while you’re living there.
It’s important to look at your lifestyle and potential life changes in the future. For instance, if you’re single and don’t plan to get married or have children, your needs will be very different than someone intending to go down that path. We don’t encourage people to buy a “starter home,” rather to review what you want your future to be and buy the best possible option you can afford without stretching your budget or breaking the bank.
In this sense, renting while you consider big life changes might be a long-term advantage for you. Or, if you’re only in the Bay area for a job and think you might need to move within just a few years, buying a home may not be a good short-term investment. Again, renting may be a better solution in that case.
While you decide if renting or buying is best for you, we encourage you to contact GoPrime and talk to a lender to discuss your options. It can help you put your own finances in perspective and give you a better picture about what you can do today, a year from now, or five years from now.
You may also want to review important information like our mortgage document checklist to see what you need in order to get the process started.
You can also check out our frequently asked questions to see if we’ve already addressed some of your initial concerns about getting a mortgage or whether renting or buying is best for you.
And don’t hesitate to call our team to discuss your mortgage options. Zachery Adam and the team at GoPrime Mortgage, Inc of California are available to help you learn more about the process and see if it’s right for you.
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