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Where did you get 3k a month for housing?? Remember, this is an 80-10-10 loan which means you have two loans. I have a 80-10-10 loan for a roughly $900k house

Where did you get 3k a month for housing?? Remember, this is an 80-10-10 loan which means you have two loans. I have a 80-10-10 loan for a roughly $900k house and the first mortgage is $3400/mth (30 year fixed at 4.15%) and the second loan is $600/mth (same but around 6% interest). $4000/mth just for the mortgages, property tax is about 12k for the year, which means you pay $5000/mth on housing. For reference, this is San Jose. So with your estimate, you're actually left with $4k saved for the year..

cobookman 9y ago
After interest deductions on mortgage & property taxes a 1 mil home is ~4000$/month in `rent`. Yes you'd be paying more than 4k but you'd also be taking home more money as well.
- slezakattack 9y ago
  I just described a home that is $100k less than the $1MM example. The property tax rate in San Jose is roughly 1.3% of the price of the home you bought it at. So for $1MM, you're looking at $13k in property taxes, not to mention a higher mortgage overall from my example. A quick mortgage calculator tells me that we're adding another $400/mth for the $1MM example. This doesn't include the second mortgage which will roughly be $100,000 loan at about 6.5% interest. So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions (in order to meet your ~$4000/mth)?? Effectively making your property taxes free for you? You're either delusional or I am going to have a very exciting tax season come next April...
  - deleted 9y ago
    [deleted]
  - cobookman 9y ago
    Your combined interest on both roughly tracks 4.1-4.7% overall. See my comment below. “so 900k mortgage at 4.1% interest is ~3k of interest and 1.2k of principal for first month. Now you have 1k/month of property tax, 0 HOA (i was not talking about a condo), and 180$/month of insurance. I've been quoted 80-10-10 which have 0 PMI fees. Let's be safe and assume that you're taxed at 30% at your highest level. Its likely you're being taxed at 40% though. Now doing some math.... 3k*0.7 + 1.2k + 1k+0.7+.180k = 4180$/month. Obviously there's maintenance and other costs but that's how much its actually costing you.”
  - TheCoelacanth 9y ago
    > So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions Something like that. Federally, local property taxes and mortgage interest on the first $1 million of principle for first and second mortgages for your primary residence are deductible from your income. For California, the rules are slightly different, but I think that they are close enough to use the same rules for estimation purposes. Using the interest rates from your example that would be a deduction of 4.5% * $800k + 6.5% * $100k = $39.7k for the mortgage interest deduction and roughly $12.5k for the property tax deduction for a total deduction of $52.2k. If you can afford a million dollar house, you are probably in either the 28% bracket or the 33% bracket for federal taxes and in the 9.3% bracket for California taxes so that will save you $14.6k-$17.2k on federal taxes and $4.9k on California taxes.

cobookman 9y ago

After interest deductions on mortgage & property taxes a 1 mil home is ~4000$/month in `rent`. Yes you'd be paying more than 4k but you'd also be taking home more money as well.

slezakattack 9y ago
I just described a home that is $100k less than the $1MM example. The property tax rate in San Jose is roughly 1.3% of the price of the home you bought it at. So for $1MM, you're looking at $13k in property taxes, not to mention a higher mortgage overall from my example. A quick mortgage calculator tells me that we're adding another $400/mth for the $1MM example. This doesn't include the second mortgage which will roughly be $100,000 loan at about 6.5% interest. So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions (in order to meet your ~$4000/mth)?? Effectively making your property taxes free for you? You're either delusional or I am going to have a very exciting tax season come next April...
- deleted 9y ago
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- cobookman 9y ago
  Your combined interest on both roughly tracks 4.1-4.7% overall. See my comment below. “so 900k mortgage at 4.1% interest is ~3k of interest and 1.2k of principal for first month. Now you have 1k/month of property tax, 0 HOA (i was not talking about a condo), and 180$/month of insurance. I've been quoted 80-10-10 which have 0 PMI fees. Let's be safe and assume that you're taxed at 30% at your highest level. Its likely you're being taxed at 40% though. Now doing some math.... 3k*0.7 + 1.2k + 1k+0.7+.180k = 4180$/month. Obviously there's maintenance and other costs but that's how much its actually costing you.”
- TheCoelacanth 9y ago
  > So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions Something like that. Federally, local property taxes and mortgage interest on the first $1 million of principle for first and second mortgages for your primary residence are deductible from your income. For California, the rules are slightly different, but I think that they are close enough to use the same rules for estimation purposes. Using the interest rates from your example that would be a deduction of 4.5% * $800k + 6.5% * $100k = $39.7k for the mortgage interest deduction and roughly $12.5k for the property tax deduction for a total deduction of $52.2k. If you can afford a million dollar house, you are probably in either the 28% bracket or the 33% bracket for federal taxes and in the 9.3% bracket for California taxes so that will save you $14.6k-$17.2k on federal taxes and $4.9k on California taxes.