It’s no secret: Seal Beach possesses a charm that attracts people here who want to embrace the small town lifestyle.
Maybe it’s the quaint Main Street and businesses, the picturesque pier or the award winning school district. But whatever draws people here, each is faced with the need to either rent or buy a Seal Beach home.
It’s not uncommon during this time of the year, for a half dozen or more people to walk into my office and inquire about living arrangements.
The conversation usually starts with the price of rentals and progresses to the cost to purchase. A little known fact that surprises many is, when the real estate market declines, the demand and price for rental housing rises.
This is not to assume that it’s cheaper, in all circumstances, to own rather than rent. But there are situations in which one can be more cost effective than the other. An easy way to illustrate this scenario is by comparing the cost of a two-bedroom home for sale and a two-bedroom home for rent. We’ll also look at the three-bedroom home for sale and a three-bedroom home for rent.
The market rent on a two-bedroom home is presently $1,800 – $2,250 monthly. According to Angela Comstock of CLS Financial Services, if you purchased the two bedroom home at 246 17th Street for $525,000 using FHA financing (3.5 percent down) your principle & interest payment would be $2,424.03 at a rate of 3.875 percent. Purchasing the same home with Conventional financing with 20 percent down payment, your principle & interest payment would be $2,020.99 at a rate of 4.125 percent.
For families in need of a three-bedroom home, market rents are presently $2,650 – $3,100 monthly. If you were to purchase the three bedroom home at 750 Catalina Avenue for $740,000, Angela’s scenario using FHA financing (3.5 percent down) shows a principle & interest payment of $3,393.64 at a rate of 3.875 percent.
Switching to 20 percent down payment and conventional financing scenario, your principle & interest payment would be $2,979.31 at a rate of 4.5 percent.
Aside from the obvious benefits of owning your own Seal Beach home, you’re able to deduct the property tax and mortgage interest on your tax return.
The examples above take into consideration several factors, so it’s important to talk to a mortgage professional about your specific financial scenario prior to shopping for a home.
Depending on your credit score and loan program, among other factors, the APR can vary from 4.88 percent – 6.102 percent.
If you are trying to decide whether to rent or buy, first start by getting informed on the local real estate market. A good online resource to gather information on homes for sale and recently sold is www.SealBeachHomeValues.com. The more information you have, the more educated decision you will be able to make about how to best meet your housing needs.
Nat Ferguson is a fourth-generation Seal Beach resident and Realtor. He can be contacted at (562) 645-6501, online at www.NatSellsSealBeach.com or at his office located at 1400 Ocean Ave., Seal Beach.
