Loan Officer Scare Tactic

[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).

[pepsi]

[quote=esmith]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

…..
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.
…..

[/quote]

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).

[pepsi]

[quote=esmith]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

…..
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.
…..

[/quote]

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).

[pepsi]

[quote=esmith]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

…..
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.
…..

[/quote]

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).

[pepsi]

[quote=esmith]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

…..
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.
…..

[/quote]

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).

[pepsi]

[quote=esmith]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

…..
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.
…..

[/quote]

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).

[Eugene]

[quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.

[Eugene]

[quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.

[Eugene]

[quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.

[Eugene]

[quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.

[Eugene]

[quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.

[pepsi]

[quote=esmith][quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.[/quote]

So the cost of ownership is
2550 + 50 + 550 + 350 (use AN’s number) – $552 – $205 = $2743

So, is it the time to buy now ?!

[pepsi]

[quote=esmith][quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.[/quote]

So the cost of ownership is
2550 + 50 + 550 + 350 (use AN’s number) – $552 – $205 = $2743

So, is it the time to buy now ?!

[pepsi]

[quote=esmith][quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.[/quote]

So the cost of ownership is
2550 + 50 + 550 + 350 (use AN’s number) – $552 – $205 = $2743

So, is it the time to buy now ?!

[pepsi]

[quote=esmith][quote]When you take interest tax deduction, you lost your $10700 (if file jointly).
So, the saving should be $568, not $1063[/quote]

(2550 + 550) * 12 – 10700 is 26500, tax savings of $552/month (federal) and $205/month (state). And that assumes that you have nothing else to deduct. But, at the very least, you can deduct your previous year state tax and all DMV registration fees of your cars.[/quote]

So the cost of ownership is
2550 + 50 + 550 + 350 (use AN’s number) – $552 – $205 = $2743

So, is it the time to buy now ?!

[Author]

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