People, whatever you do, if for nothing more than knowing where you stand, get your true FICO score from www.myfico.com
. If you are payingÂ $1500/month you are making a non tax deductable (for most) donation to paying the landlords mortgage down. In this "Landlords Market" people are choosing to rent for one reason or another, I am going to give ya'll a visual that will blow your minds and make you hopefully think a little differently!
If you rent for $1500/month and your rent never goes up for 10 years you have spentÂ $180,000!
No Deductions just money out the window!
If you purchase the equivalent homeÂ $150,000 your entire payment P&I as well as taxes and interest might be around $1200/month +/-Â over 30 years. If financed for 15 years your payment would be pretty close to the $1500/month+/- you are paying in rent.Â Â
Now for the added bonuses:
1. Mortgage interest deduction lowers your tax liability.Â
(example: Lets say $6500 of your first years payments is interest most are allowed the Mortgage deduction which would reduce your income taxes paid! Lets say in this example you make $30,000/yr, you instantly just received a $6500 reduction in your taxable income.)
2. Every year you live in the home you are building massive equity, Start thinking of your home like a huge piggy bank! Below isÂ the example from above, 150,000 @ 4.5% for 15 years
-Year 1 Balance $142,923 Equity $7,077
-Year 2 Balance $135,517 Equity $14,483
-Year 3 Balance $127,766 Equity $22,234
-Year 4 Balance $119,654 Equity $30,346
-Year 5 Balance $111,164 Equity $38,836
-Year 6 Balance $102,280 Equity $47,720
-Year 7 Balance $92,981 Â Â Equity $57,019Â Â Â
-Year 8 Balance $83,249 Â Â Equity $66,751
-Year 9 Balance $73,064.93 Equity $76,935.07
-Year 10 Â Â Balance $62,405.85 Equity $87,594.15
-Year 11 Â Â Balance $51,250.44 Â Equity $98,749.56
-Year 12 Â Â Balance $39,575.58 Â Equity $110,424.42
-Year 13 Â Â Balance $27,357.08 Â Equity $122,642.92
-Year 14 Â Â Balance $14,569.63 Â Equity $135,430.37
-Year 15 Â Â Balance $0 Â Â Â Equity $150,000
Plus any added appreciation if any...
I encourage all to purchase if able and if you are not sure contact me and I will put you in touch with lenders that can make things happen.
If you are interested in the reverse and want to invest in rental homes in this strong rental market the numbers work the same just the rate is a little higher.
***Disclaimer*** All examples are just that and should be verified, not intended to give financial and/or tax advice, This information is the opinions of John Greer solely.
Your Investment Realtor,
United Real Estate Dallas
whether individual,Â Â bank, or builder has someone looking out after
their best financial interests and since my services are at no cost to you, put
me to work for you today!
the right price now could mean the difference between bringing money to the
table or leaving with some in your pocket at the time of resale!
It is true
you make your money when you buy!
Estate Investor (1997-Present)
Tax Negotiation and Representation (2001-Present)