"Using a 4.25% interest rate, 30-year loan, and 20% down, a total of 360 payments for a $600,000 house would be $1,075,072, compared to $1,433,429 for an 800,000 house. That's a difference of ~$350,000."
Just to confirm:
A 600K home (480K loan) held over a standard 30-year loan amortization would be a total outlay of $850,073. The 800K home (640K loan) would be 1,333,428; a difference of $283,355. Using your private school estimate of $216,000 provides a $67,355 difference.
Assuming a $600k/800k loan comparison total payments are $1,062,590 and $1,416,786; a $354,196 difference. Using your private school estimate of $216,000 provides a $138,196 difference.
"I am not sure if my calculation makes sense. If it does not, please advise."
Your calculation makes sense; however, assuming you can deduct generated mortgage interest and a conservative 25% tax bracket, the 800K loan provides a $154,197 tax benefit with the 600K loan providing $115,647 (obviously there is also a delta regarding deductible property taxes, currently running at 1.132% of the County Assessors annual valuation.
The Truth of the Matter:
The decision process for buying a home is both: 1) Quantitative; measured in the case of past performance and/or current pricing along with a speculated x-year future valuation, and 2) Qualitative; experiential through visual, spatial, and auditory observations.
As Real Estate professionals those of us who have commented below have experienced Clients going over a "set-in-stone budget" after physically visiting a property. After all, itâ€™s up to the individual to place a value on a tree-lined quite street, friendly neighbors who have occupied their home for decades, a serene view, or uncongested street parking, as an example.
One exercise you may want to consider to appease your quantitative needs is to perform a multi-year historical sales report for a specific housing population. For example, all 3-bed, 2-bath, 1800-2300sf, detached single family homes within the geo-bounded Mission/Irvington school attendance areas sole over the last 7 years. This will likely demonstrate the relative resiliency between these two areas. Shoot me an email if you are interested (no obligation of course).
In contrast, all of our kids grew up in the Fremont Tri-Cities area â€“ one of our children is a physician specializing in para-natal robotic surgery â€¦ who never spent a day in a Fremont Unified School.
Iâ€™m beginning to see families push against the idea of insisting on top performing schools â€“ which, in many cases, can even have very narrow cultural distinctives â€“ who are choosing to focus instead on schools where their children will still get a great education (Brookvale and Parkmont are two great examples) AND be able to mix with the greatest possible number of cultures, enabling them to be world class citizens.
And, last time I looked, homes in Brookvale are considerably less costly than MSJ.
On the other hand, using a rough average of $3,000 per month for two kids' private schooling (adjusting for inflation a bit), the entire secondary schooling will cost $3,000 * 12 * 6 = $216,000, which is still a savings of ~$135,000 in the long run. If I replace the middle or high school portion of it with public school, then the savings is even more.
Of course, the spectrum would change depending on the actual difference between the prices of the houses in MSJ/Weibel and other places.
I am not sure if my calculation makes sense. If it does not, please advise.
You have a choice of 19 Private Schools in Fremont. Here is all of the information for each of them:
Your commute direction would be needed to consider private schools outside of Fremont.
Now, a quick â€œreality checkâ€ looking at breakeven points on this decision. Theoretically, you would be saving $100K-$200K in price; however, at todayâ€™s rates (assume a 30-year @ 4.25%) we are really talking about adding $492-$984 per month in mortgage payment (not deducting for the mortgage interest write-off) if you buy in MSJ/Warms Springs.
So, does not the question then become whether you will you be able to find an acceptable Private School at these monthly tuition levels?