Renting Over Buying

Leasing is simply placing your money away when come to think of it realistically. When you pay rental to your homeowner each month you're just providing him the payment without acquiring any benefits from it. Lease expenditures intended for your existing places are in fact not insurance deductible on your work while in the situation of your home loan monthly obligations it’s totally different.

You’ve got an incredible job of seeing that it’s the right time for you to make your ideal home a reality. You might be spending rental for decades now yet you've got nothing to display for it.

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There is actually some great news in keep for you personally. It might be unbelievable but certainly it’s true. Got fascinated about it? Well, the US government your Uncle Sam really can help you finance for this.

Your payment per month is made of the following items:
a. Principal payment on the loan
b. Interest on the loan
c. A part of your annual homeowner’s insurance premium
d. A part of your annual real estate taxes

Of the above items (b) Interest and (d) real estate taxes are deductible on your income tax return. (There might be additional components of your mortgage based on your local taxes and customs, which may even be tax deductible. These vary in different parts of the country. Seek advice from your local experts.)

Let’s use a good example and discover how you can utilize this in your favor.

$1,250 per month = rent at present
$1400 per month = mortgage payment proposal
Breakdown of mortgage payment:
Principal: $ 50.00
Interest: $1000.00
Homeowner’s Insurance $ 100.00
Real estate taxes $ 250.00
Total: $1400.00

Your monthly interest and real estate taxes can be subtracted from your income tax return. The two of these items total $1250 every month ($1,000 for interest and $250 for real estate taxes.) In case you are in the 25% income tax bracket, this deduction will save you $312.50 monthly in taxes that you simply otherwise would have had to pay the government. Your effective monthly mortgage payment is basically $1,087.50($1400 less 312.50). In this example; this is less than you used to be paying out in rent.

Visit to simplify your mortgage calculation.

Total mortgage payment $1400.00
Monthly savings on income taxes $312.50
Effective monthly loan payment $1,087.50

Now, here’s the important part. Since you are saving $312.50 per month in income taxes you can fill up a new form W-4 with your employer and ask them to lessen your withholdings from your earnings by $312.50 per month. You’ve just given yourself a monthly raise of $312.50 which you can use every month toward your mortgage payment of $1400-thereby efficiently reducing the payment to $1,087.50-which in this illustration is lower than your rent payment.

Do you want to simplify your mortgage calculation? Take advantage of a house mortgage calculator from

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