Why Don’t Mortgage Calculators Factor Tax Break?

[temeculaguy]

One of the reasons it doesn’t factor it in is because the qualification percentage is based on GROSS income. The formula has been used for a long time and is time tested for repayment success. When just a couple of percentage points are added, the failure rate of those in the margin is much higher than those below that number. Part of the problem with what is happening right now is that they stopped using that number for a couple of years and it comes as no shock that those people couldn’t make it.

On a 100k GROSS, 2800 piti is already too much (a simple way to illustrate the 28%). That person takes home something in the neighborhood of 4-5k after medical insurance, retirement, etc. The house and utils is going to be 4k, too much, even if they get back an additional 600 a month in taxes.

They also don’t count gas for your car, braces for the kids, internet access or any of the dozens of other things that money ends up going to. They use that formula because it has been proven by a few million mortgages, they are protecting their money and in a way, it protects you, don’t set yourself up for failure. Try and stay under that number by either waiting for your income to rise, the price of the house to fall or look for a cheaper house.

[4plexowner]

and don’t forget that the ‘tax benefit’ of deducting interest is offset by the loss of the standard deduction – that’s $5K/yr for singles and $10K/yr for couples

so you ‘save’ $600/mo by deducting your interest expense – you and your wife have ‘lost’ $833/mo because you no longer get the $10K standard deduction

[4plexowner]

and don’t forget that the ‘tax benefit’ of deducting interest is offset by the loss of the standard deduction – that’s $5K/yr for singles and $10K/yr for couples

so you ‘save’ $600/mo by deducting your interest expense – you and your wife have ‘lost’ $833/mo because you no longer get the $10K standard deduction

[4plexowner]

and don’t forget that the ‘tax benefit’ of deducting interest is offset by the loss of the standard deduction – that’s $5K/yr for singles and $10K/yr for couples

so you ‘save’ $600/mo by deducting your interest expense – you and your wife have ‘lost’ $833/mo because you no longer get the $10K standard deduction

[4plexowner]

and don’t forget that the ‘tax benefit’ of deducting interest is offset by the loss of the standard deduction – that’s $5K/yr for singles and $10K/yr for couples

so you ‘save’ $600/mo by deducting your interest expense – you and your wife have ‘lost’ $833/mo because you no longer get the $10K standard deduction

[4plexowner]

and don’t forget that the ‘tax benefit’ of deducting interest is offset by the loss of the standard deduction – that’s $5K/yr for singles and $10K/yr for couples

so you ‘save’ $600/mo by deducting your interest expense – you and your wife have ‘lost’ $833/mo because you no longer get the $10K standard deduction

[scaredyclassic]

i am stunned at the number of people who do not know that there is a satndard deduction. educated people. as if there would be no deduction from your taxes if you did not itemize. the standard deduction is going to be greater than the itemizations ona lot of cheap houses! and when you run the nubers, add property tax — there is no tax savings!

[scaredyclassic]

i am stunned at the number of people who do not know that there is a satndard deduction. educated people. as if there would be no deduction from your taxes if you did not itemize. the standard deduction is going to be greater than the itemizations ona lot of cheap houses! and when you run the nubers, add property tax — there is no tax savings!

[scaredyclassic]

i am stunned at the number of people who do not know that there is a satndard deduction. educated people. as if there would be no deduction from your taxes if you did not itemize. the standard deduction is going to be greater than the itemizations ona lot of cheap houses! and when you run the nubers, add property tax — there is no tax savings!

[scaredyclassic]

i am stunned at the number of people who do not know that there is a satndard deduction. educated people. as if there would be no deduction from your taxes if you did not itemize. the standard deduction is going to be greater than the itemizations ona lot of cheap houses! and when you run the nubers, add property tax — there is no tax savings!

[scaredyclassic]

i am stunned at the number of people who do not know that there is a satndard deduction. educated people. as if there would be no deduction from your taxes if you did not itemize. the standard deduction is going to be greater than the itemizations ona lot of cheap houses! and when you run the nubers, add property tax — there is no tax savings!

[(former)FormerSanDiegan]

Mortgage calculators are too simple to factor taxes in because it can be drastically different and complicated. For it to be accurate it would have to account for deduction phase outs, AMT rules and many other factors. It’s too complicated to boil down to a simple formula for all people, even though in your case it might be quite simple.

As for figuring it out for your paprticular circumstances. I would definitiely figure out the tax impacts in my analysis of what I could afford. Do not make too many assumptions or use rules of thumb. You wouldn’t make a monthly budget without considering how much you take home versus gross income. Same thing with budgeting for a house.

[(former)FormerSanDiegan]

Mortgage calculators are too simple to factor taxes in because it can be drastically different and complicated. For it to be accurate it would have to account for deduction phase outs, AMT rules and many other factors. It’s too complicated to boil down to a simple formula for all people, even though in your case it might be quite simple.

As for figuring it out for your paprticular circumstances. I would definitiely figure out the tax impacts in my analysis of what I could afford. Do not make too many assumptions or use rules of thumb. You wouldn’t make a monthly budget without considering how much you take home versus gross income. Same thing with budgeting for a house.

[(former)FormerSanDiegan]

Mortgage calculators are too simple to factor taxes in because it can be drastically different and complicated. For it to be accurate it would have to account for deduction phase outs, AMT rules and many other factors. It’s too complicated to boil down to a simple formula for all people, even though in your case it might be quite simple.

As for figuring it out for your paprticular circumstances. I would definitiely figure out the tax impacts in my analysis of what I could afford. Do not make too many assumptions or use rules of thumb. You wouldn’t make a monthly budget without considering how much you take home versus gross income. Same thing with budgeting for a house.

[(former)FormerSanDiegan]

Mortgage calculators are too simple to factor taxes in because it can be drastically different and complicated. For it to be accurate it would have to account for deduction phase outs, AMT rules and many other factors. It’s too complicated to boil down to a simple formula for all people, even though in your case it might be quite simple.

As for figuring it out for your paprticular circumstances. I would definitiely figure out the tax impacts in my analysis of what I could afford. Do not make too many assumptions or use rules of thumb. You wouldn’t make a monthly budget without considering how much you take home versus gross income. Same thing with budgeting for a house.

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