There are many benefits to homeownership in Orange County, CA. One of the top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage. Rents have increased quickly over the past few years in Orange County, CA which is leaving many renters feeling trapped. They feel as though they have missed out on low prices and are not sure whether to wait for prices to drop again (will that happen any time soon) or move inland, like to the Inland Empire (Riverside or San Bernardino county).
Don’t Become Trapped Renting in Orange County
Jonathan Smoke, Chief Economist at realtor.com recently reported on what he calls a “Rental Affordability Crisis”. He warns that,
“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.” This is especially true in Orange County.
The Joint Center for Housing Studies at Harvard University recently released their 2015 Report on Rental Housing, in which they reported that 49% of rental households are cost-burdened, meaning they spend more than 30% of their income on housing. These households struggle to save for a rainy day and pay other bills, such as food and healthcare.
It’s Cheaper to Buy Than Rent
In Smoke’s article, he went on to say,
“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”
“While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”
Learn Your Mortgage Options
Maybe you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:
“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.
It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.”
Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we reported last week, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!
In Orange County, where loan limits for Conventional, FHA and VA are $625,500, many renters are surprised to find out that they don’t need 20% down. The VA home loan program doesn’t require any down payment up to a $625,500 purchase price, and the Jumbo VA program only requires a small down payment for prices higher than $625,500. FHA only requires 3.5% down payment up to a purchase price of $648,000, and Conventional program now only require 5% down up to a purchase price of $658,400.
Bottom Line for Orange County Renters
Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a local Orange County mortgage professional help you determine if you are eligible to get a mortgage.
Rent Versus Own Analysis
A Rent versus Own Analysis will compare your current rent payment to a mortgage payment payment, taking into account several factors. By having an Orange County mortgage loan officer prepare a Rent versus Own Analysis renters will be able to get a good idea of what their options are.
Authored by Tim Storm, an Orange County Loan Officer. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. You can also visit my blog at www.OrangeCountyVALoans.com. I will prepare custom loan scenarios which will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.