For many years in the state of California it did not make sense for many veterans and active military to buy with VA financing vs. rent. The prices from 2002-2008 were often so high in the state of California that it favored renting. But since 2008 when prices and VA interest rates fell dramatically in California, the tables have turned dramatically and today in most cases veterans and active military are making a much smarter financial decision to use VA financing buy vs. rent.
Below is a table that compares some of the benefits to buying vs. renting:
| Rent | Buy | |
| Monthly Payment | $2,200/mo rent payment | $2,200/mo PITI house payment |
| Tax Savings per year | None | $5,000 estimate |
| Loan principle pay down | None | $5,000 per year |
| Repairs and Maintenance | No | Yes |
| Inflation protection house payment (30 year fixed loan) | No | Yes |
| Ability to make renovations | No | Yes |
| Have to move if owner sells or moves in | Yes | No |
| Flexibility to move quickly | Yes | No |
So as you can see there some very compelling reasons to use your VA loan eligibility to buy a home in California vs. renting. Let me elaborate a little more on each:
- When you buy a home in the United States you get to write off the mortgage interest and property taxes. When you rent there are NO tax deductions. For a $300,000 house we estimate you would save $5,000 a year paying less federal taxes, which is equal to $416/mo! So already buying is $416/mo cheaper than renting with the same payment
- When you get a 30 year fixed fully amortizing VA loan, part of your monthly payment is interest, part is principle of the loan balance. You will pay $5,000 towards principle the first year of owning the house! That share of principle you pay vs. interest increases yearly. When you rent you only pay the landlords loan balance down. So that is another $416/mo savings vs. rent (we are now up to $832/mo less than rent!). Additionally, you will one day pay the mortgage off completely, where you will always have rent.
- When you own you will have to cover all the repairs and maintenance of a house. This is something you do not have to pay when you rent. So you do want to budget for this and keep this in mind.
- Inflation protection…when you get a 30 year fixed VA home loan, you are fixing your house payment for 30 years! It will not change. Rent will go up over time. Do you think rent will be the same in 10, 20, 30 years?
- When you buy you can make any changes you want to the house without asking the landlord. Also when you upgrade you are increasing the value of the house
- Finally when you rent vs. buy, you generally have a bit more flexibility to move (if you are not tied into a lease)
I hope this helps bring to light some of the advantages of using your VA home loan benefits to buy vs. rent. If you have any questions about getting approved for a VA home loan in California give us a call at 858-922-7899 or email at homeloan8@gmail.com .
Below are some up-to-date benefits of VA home loans in California:
- VA loan 30 year fixed rates are still near the lowest they have ever been in history
- VA mortgage loan limits go up to $1 million with 100% financing in many areas of California. Los Angeles and Orange County allow VA loans with 100% financing up to $700,000. San Diego 100% VA loans go up to $537,750
- VA home loan refinance allows a streamline loan to lower your VA interest rate to market
- VA loan credit does not have to be perfect
Rob Chomentowski
858-922-7899
Sr. Loan Officer (and VA specialist)
Buy With VA Financing Vs. Rent in California is a post from: VA Home Loans Call Rob 858-922-7899
No Comments
No comments yet.
RSS feed for comments on this post.
Sorry, the comment form is closed at this time.