Everybody knows you can write off your mortgage interest and property taxes, but few people understand what that means when it comes to your monthly income.
If you purchase a home with a $200,000 mortgage at 4.75% interest you will pay $9344.30 in interest the first year. If your taxes are $5500 the total you will be able to deduct from your income will be $14,844.30.
How does that translate to monthly income? Watch this. If you are in a 20% tax bracket your actual cash savings will be $2968.86. Now divide that number by 12 and you are pocketing $247.40 every month.
To translate that tax savings to monthly income, simply change your W-4 withholding with your employer and presto – $247.40 every month in your pay checks.
If you are currently renting for $1300 per month, you can afford a mortgage payment of $1547.40 with NO CHANGE to your lifestyle. That translates to you purchasing a property worth $153,500 vs the $200,000 purchase price! That is $46,500 in purchasing power with zero change to your income or lifestyle!
In Saratoga, Malta, Albany, Troy, Schenectady and the surrounding area in Upstate New York we, at Victory Funding, see a vast difference between the homes listed at 150K vs the average selling price of 200K.
So, don’t be afraid to purchase a property that you would prefer to live in! It won’t change your lifestyle one bit! Happy house hunting!
