Loan Officer Scare Tactic

[an]

CardiffBaseball, I think it’s pretty safe to say tax benefit cancel out the tax you have to pay. I ran many loan amortization calculation and that’s my conclusion as well. That’s why I usually just ignore tax benefit and property tax and just concentrate on PI vs rent.

[Eugene]

Let’s do it slightly differently.

$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

You could have kept your $120,000 down payment, but stock market sucks, and, with interest rates as low as they are, CDs and savings accounts don’t yield much more than 3%. You could have been getting $300/month in interest and paying a third of that amount in taxes. Your total downpayment opportunity loss is $197/month.

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.

$600,000 goes a long way in San Diego. You can buy this

http://www.redfin.com/CA/San-Diego/11839-Caminito-Corriente-92128/home/4632952

or this

http://www.redfin.com/CA/Carlsbad/2411-Jacaranda-92009/home/4072801

or even this

http://www.redfin.com/CA/San-Diego/11248-Carmel-Creek-Rd-92130/home/6396904

and it would probably cost you more than $2300 to rent any one of these.

[Eugene]

Let’s do it slightly differently.

$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

You could have kept your $120,000 down payment, but stock market sucks, and, with interest rates as low as they are, CDs and savings accounts don’t yield much more than 3%. You could have been getting $300/month in interest and paying a third of that amount in taxes. Your total downpayment opportunity loss is $197/month.

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.

$600,000 goes a long way in San Diego. You can buy this

http://www.redfin.com/CA/San-Diego/11839-Caminito-Corriente-92128/home/4632952

or this

http://www.redfin.com/CA/Carlsbad/2411-Jacaranda-92009/home/4072801

or even this

http://www.redfin.com/CA/San-Diego/11248-Carmel-Creek-Rd-92130/home/6396904

and it would probably cost you more than $2300 to rent any one of these.

[Eugene]

Let’s do it slightly differently.

$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

You could have kept your $120,000 down payment, but stock market sucks, and, with interest rates as low as they are, CDs and savings accounts don’t yield much more than 3%. You could have been getting $300/month in interest and paying a third of that amount in taxes. Your total downpayment opportunity loss is $197/month.

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.

$600,000 goes a long way in San Diego. You can buy this

http://www.redfin.com/CA/San-Diego/11839-Caminito-Corriente-92128/home/4632952

or this

http://www.redfin.com/CA/Carlsbad/2411-Jacaranda-92009/home/4072801

or even this

http://www.redfin.com/CA/San-Diego/11248-Carmel-Creek-Rd-92130/home/6396904

and it would probably cost you more than $2300 to rent any one of these.

[Eugene]

Let’s do it slightly differently.

$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

You could have kept your $120,000 down payment, but stock market sucks, and, with interest rates as low as they are, CDs and savings accounts don’t yield much more than 3%. You could have been getting $300/month in interest and paying a third of that amount in taxes. Your total downpayment opportunity loss is $197/month.

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.

$600,000 goes a long way in San Diego. You can buy this

http://www.redfin.com/CA/San-Diego/11839-Caminito-Corriente-92128/home/4632952

or this

http://www.redfin.com/CA/Carlsbad/2411-Jacaranda-92009/home/4072801

or even this

http://www.redfin.com/CA/San-Diego/11248-Carmel-Creek-Rd-92130/home/6396904

and it would probably cost you more than $2300 to rent any one of these.

[Eugene]

Let’s do it slightly differently.

$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

You could have kept your $120,000 down payment, but stock market sucks, and, with interest rates as low as they are, CDs and savings accounts don’t yield much more than 3%. You could have been getting $300/month in interest and paying a third of that amount in taxes. Your total downpayment opportunity loss is $197/month.

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.

$600,000 goes a long way in San Diego. You can buy this

http://www.redfin.com/CA/San-Diego/11839-Caminito-Corriente-92128/home/4632952

or this

http://www.redfin.com/CA/Carlsbad/2411-Jacaranda-92009/home/4072801

or even this

http://www.redfin.com/CA/San-Diego/11248-Carmel-Creek-Rd-92130/home/6396904

and it would probably cost you more than $2300 to rent any one of these.

[an]

esmith, first, lets just assume that we’re already at the bottom and we’re just going to stay at the bottom for the next 5 years. You can get a 5 year CD at E-Loan for 5.25%. That’s ~$350/month after taxes. So, you would have to compare $2300/month mortgage with $2650/month rent.

For $2700/month in rent, you can rent places like:

This or this.

Houses similar to those 2 are selling in the mid 600s right now.

At today’s environment, assuming we’re at the bottom is pretty bold.

[an]

esmith, first, lets just assume that we’re already at the bottom and we’re just going to stay at the bottom for the next 5 years. You can get a 5 year CD at E-Loan for 5.25%. That’s ~$350/month after taxes. So, you would have to compare $2300/month mortgage with $2650/month rent.

For $2700/month in rent, you can rent places like:

This or this.

Houses similar to those 2 are selling in the mid 600s right now.

At today’s environment, assuming we’re at the bottom is pretty bold.

[an]

esmith, first, lets just assume that we’re already at the bottom and we’re just going to stay at the bottom for the next 5 years. You can get a 5 year CD at E-Loan for 5.25%. That’s ~$350/month after taxes. So, you would have to compare $2300/month mortgage with $2650/month rent.

For $2700/month in rent, you can rent places like:

This or this.

Houses similar to those 2 are selling in the mid 600s right now.

At today’s environment, assuming we’re at the bottom is pretty bold.

[an]

esmith, first, lets just assume that we’re already at the bottom and we’re just going to stay at the bottom for the next 5 years. You can get a 5 year CD at E-Loan for 5.25%. That’s ~$350/month after taxes. So, you would have to compare $2300/month mortgage with $2650/month rent.

For $2700/month in rent, you can rent places like:

This or this.

Houses similar to those 2 are selling in the mid 600s right now.

At today’s environment, assuming we’re at the bottom is pretty bold.

[an]

esmith, first, lets just assume that we’re already at the bottom and we’re just going to stay at the bottom for the next 5 years. You can get a 5 year CD at E-Loan for 5.25%. That’s ~$350/month after taxes. So, you would have to compare $2300/month mortgage with $2650/month rent.

For $2700/month in rent, you can rent places like:

This or this.

Houses similar to those 2 are selling in the mid 600s right now.

At today’s environment, assuming we’re at the bottom is pretty bold.

[Eugene]

my 2300 already includes $200 lost income from down payment. Your E-Loan CD brings 150 more after taxes.

I don’t assume anything, I’m merely making an observation that some houses in desirable areas are currently cheaper to own than to rent. Also, if you buy one of them, your cost to own will remain more or less constant, but the equivalent rent may rise with inflation. In my opinion, it indicates that the bottom may not be too far in those areas. Further substantial declines in places like RB and PQ can only be caused by a substantial rise in interest rates or a drop in rents (maybe because of mass layoffs in IT).

[Eugene]

my 2300 already includes $200 lost income from down payment. Your E-Loan CD brings 150 more after taxes.

I don’t assume anything, I’m merely making an observation that some houses in desirable areas are currently cheaper to own than to rent. Also, if you buy one of them, your cost to own will remain more or less constant, but the equivalent rent may rise with inflation. In my opinion, it indicates that the bottom may not be too far in those areas. Further substantial declines in places like RB and PQ can only be caused by a substantial rise in interest rates or a drop in rents (maybe because of mass layoffs in IT).

[Eugene]

my 2300 already includes $200 lost income from down payment. Your E-Loan CD brings 150 more after taxes.

I don’t assume anything, I’m merely making an observation that some houses in desirable areas are currently cheaper to own than to rent. Also, if you buy one of them, your cost to own will remain more or less constant, but the equivalent rent may rise with inflation. In my opinion, it indicates that the bottom may not be too far in those areas. Further substantial declines in places like RB and PQ can only be caused by a substantial rise in interest rates or a drop in rents (maybe because of mass layoffs in IT).

[Eugene]

my 2300 already includes $200 lost income from down payment. Your E-Loan CD brings 150 more after taxes.

I don’t assume anything, I’m merely making an observation that some houses in desirable areas are currently cheaper to own than to rent. Also, if you buy one of them, your cost to own will remain more or less constant, but the equivalent rent may rise with inflation. In my opinion, it indicates that the bottom may not be too far in those areas. Further substantial declines in places like RB and PQ can only be caused by a substantial rise in interest rates or a drop in rents (maybe because of mass layoffs in IT).

[Author]

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