$600,000 house financed with a conforming-jumbo at 6.375%, 20% down, 1.1% property tax rate.
Interest: $2550
Insurance: let’s say $50
Property tax: $550
…..
By owning, you’ll be enjoying tax savings; they depend on your specific situation, but we can estimate that you’ll be saving (25% + 9.3%) of interest + property tax or $1063/month.
It costs you 2550 + 50 + 550 + 200 – 1063 = $2300/month to own that house.
…..
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The problem with this calculation is that you forgot to consider Standard Deduction.
When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063
So, the cost to own is 2550 + 50 + 550 + 200 – $568 = $2794 or about $2800
By the way, the $568 is the maximum you can save on the first year. In about 15 years, the standard deduction will be raised and your interest payment will be lower and soon there is not much you get to save from the interest tax deduction. Yet, the property tax is forever (and probably higher).
