True Cost 2019

AF Home Loans - Proof-0110/3/2019- I hope your week is going well and I hope that everything is wonderful in your life.  Life can be stressful and tonight will be a very difficult one for me.  Dodgers are on at 5:37, the Rams start at 5:20, I am super busy at work and should probably stay until 8, and one of the boys who is living with us turns 20 today!  I hope you don’t have to make a tough decision like this anytime soon.

So I was talking with a fence-sitter last night and we were discussing whether he should buy or rent.  Well, if this was your kid, what would you say?
If you buy a property for $500,000.00 with 10% down, you would have the following payments –
Principal and Interest $2052.23 (1359.38 Interest / $692.86 Principal) / Insurance  $90.00 / Property Taxes  520.83 / PMI  82.50 = 2745.56 Total  + HOA + Mello-Roos ???

So how I look at this is you are paying $2750 +/- but you are putting +/-  $700 in long term savings called the equity of your home.  You also have a house that is an appreciating asset and property values in California have gone up on average by 5.6% over the past 60+ years.  So if your property goes up by 3% annually then it will go up by $15,000.00 per year or $1250.00 per month!  So you are paying $2750 – 700 – 1250 = $800.00 per month is the true cost of buying this house without taking taxes into consideration!

Rent  $2100 -at 2.5% annual increase the payment would be as follows –  $2379 in 5 years  / $2695 in 10 years  / $3054.29  in 15 years  / $3460.00 in 20 years / $4442.00 in 30 years!  (Yes we are talking about a 2+2 Condo if you can find one at $2100.00)
In 30 years, your house at 3% appreciation is worth $1,228,421.00 / at 4% it is at $1,656,749 / at 5% it is worth $2,233,872.
If you move and you rent your property then the property above would be renting for $2600-2800 today!  In 5 years $3059.10 / 10 years  3465.97 / 15 years – 3926.94 / 30 years $5711.00 /

If you buy a property for $550,000.00 with 10% down, you would have the following payments”
Principal and Interest $2257.45 (1495.31 Interest / $762.14 Principal) / Insurance  $90.00 / Property Taxes  572.92 / PMI  90.75 = 3011.12 Total  + HOA + Mello-Roos
So how I look at this is you are paying $3025 +/- but you are putting +/-  $770 in long term savings called the equity of your home.  So if your property goes up by 3% annually then it will go up by $16,500.00 per year or $1375.00 per month!  So you are paying $3025  – 770 – 1375 = $880.00 per month is the true cost of buying this house without taking taxes into consideration!
If you move and you rent your property then the property above would be renting for $2800-3000 today!  In 5 years $3285.00 / 10 years  3725.00 / 15 years – 4217.00 /30 years  -$6134.00

It does not make sense to rent unless you are renting from me.  By the way, I have 8 rental increases sitting on my desk right now that will kick in December 1!  Merry Christmas to me, LOL!  We have a housing shortage of 350,000 homes in Los Angeles County.  Hmm, I will keep renting and watch the landlords get rich!!  YUP!!!

Interest rates are just pure and simply whacky right now.  They jump, drop, and move all day and we can’t pin them down until we lock them.  Credit scores are very important on all conventional loans right now as the buydowns can be extreme.  Here is a glimpse of where they are at this time:

Interest rates are still in the 3.5% (3.62% APR)  – 4.00% (4.00% APR) range for conventional loans.
FHA and VA Rates are in the 3.25% (FHA APR 4.578 / VA 3.35% APR)  -3.50% range (FHA APR 4.683 / VA 3.42% APR)
Jumbo Loans are in the 3.75-4.250% range (APR 3.796-4.309)

Why Ranges?  Because they are changing a lot and a 3.50% Rate may be $1000.00 more in cost than a 3.875% rate depending on a credit score and  down payment.  Every deals seems to price differently depending om the time of day!

I will be in the office the rest of the week and I will be in and out all weekend!  My cell number is 661-714-6258 and my office line is  661-260-2970.  By the way, thank you all for reaching out about our 24 years in business.  I am hearing it is an accomplishment, but it is really a testament to this community and I want to thank you all for the support!  Have a great day and I will look forward to hearing from you soon!