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This is missing a rate of return on the money you would otherwise use for the down payment, information on whether that return would be taxable or is sheltered
by fennecfoxen 5y ago
This is missing a rate of return on the money you would otherwise use for the down payment, information on whether that return would be taxable or is sheltered in a Roth or similar tax shelter, current and anticipated tax brackets if one sees that income taxed (at both time of sale and possibly retirement), current and anticipated capital gains rates that might apply to the gains from the home sale in the future (if you're over the threshhold)...
- pessimizer 5y ago> rate of return the money you would otherwise use for the down payment Really the most important number, but all of these suggestions are crucial to the calculation. Money that doesn't get invested in a house gets invested in other things. Pretend it's in an index fund.
- deleted 5y ago[deleted]
- motioncuty 5y agoBut when you take out a morgage you can leverage 800k of the banks money at negative real interrst rates, effectively paying you tens of thousands over the course of the loan and any appreciation of that asset gets multiplied by 5x on your initial down payment.
- rashkov 5y agoNegative because the loan interest rate is below inflation?
- motioncuty 5y agoYup, mortgages are around 3% and the fed rate is near 0 for the next year or 2. If inflation averages over 3% per year, you are getting paid the difference to borrow.