Can You REALLY Buy a $400,000 Home - for a $334 Month Payment?

 

 

Hello,

Has anyone ever truly explained to you ‘why’ becoming Home Owner is so financially beneficial to you? 

You’ve heard buying a home has “all these” financial benefits like appreciation 

and tax deduction benefits, right?  But “what are they” and how do they affect

your family’s financial situation, income & your monthly debts?

Can you really ‘afford’ a bigger house payment than your current rent?

The answer is YES!!  You can’t believe how much financial benefit there is to

YOU when you actually BUY your home!!

As a matter of fact, I tell everyone that’s renting - you can BUY a beautiful

$400,000 home, and only pay about $334 a month for it – after ALL YOUR

TAX DEDUCTIONS every April 15th!!!

That’s CRAZY – right?  There’s NO such thing as a $334 mortgage loan payment on a $400,000 home!!  That’s funny!!  You must be delusional Jeff.  If that’s the case, we want to buy 3 houses with your help!! 

I’m NOT CRAZY – and YES you can get a $334 house payment…

Let me explain the ENORMOUS financial benefit you get - when you BUY a home.

Check out the chart below which shows you the home prices and the actual full PITI mortgage loan payments, if you bought a home in many parts of the Denver Metro area. I used a FHA 30-year fixed rate 4.5 percent loan - and INSTEAD of the regular 3.5% Down Payment required of $14,000 on a $400,000 home, I used the $1,000 Down FHA loan (available if your gross annual income is less than $115,000.)  FYI – every home will have different Property Taxes and Property Insurance, but the FHA Mortgage Insurance Premium will be accurate below.

On the $400,000 home example - I used information if you bought the home in Highlands Ranch, Parker or Castle Rock, which have annual HOA’s (Home Owners Association fees.)  Notice the full PITI and HOA payment is $2,693/month total.

 

Loan            Principle &      Taxes/          Insurance/       FHA         HOA/            P.I.T.I. TOTAL       Est’d Monthly Income

Amount       Interest           month          month             M.I.P.       month?         Payment            needed (31-40%) to Qualify

 

$300,000        $1,520             $100               $106                $213            -                     $1,940                    $4,860-$6,260

$350,000        $1,774             $141               $106                $247            -                     $2,268                    $5,670-$7,320

$400,000        $2,027             $159               $106                $283          $49                 $2,693                    $6,700-$8,600

$450,000        $2,280             $216               $106                $318            -                     $2,920                    $7,300-$9,420

The last column is the Front-End Debt ratio – which is your gross monthly

income divided by 31% up to 40%.  FHA rules allow you to have 31% of your

monthly income as your mortgage payment, if your credit scores are at 580.

So, on our $400,000 home example, you’d take the $2,693 PITI and divide it

by .31 = $8,600. Which means, you’d need $8,600 in monthly income to

qualify for that house payment worse-case scenario with low credit scores.

Or – if you have much higher credit scores & higher savings/401k amounts –

you’d be ‘rewarded’ with a 40% ratio. So, take $2,693 divided by .40 = $6,700. 

Your family monthly gross income requirement DROPS by $1,900, which

means you can qualify for a larger house payment with better Credit Scores

& higher savings.

So – are you “okay” with everything on the chart?  A $350,000 average home

in the Denver Metro area would have an approximate PITI full house payment

of $2,268/month – a $450,000 home would be about $2,693/month.

Explain the $334 House Payment!!!

Here’s my credentials first…  Hi - I’m Jeff Boyce, and for the past 20 years (with $100+ Million Personally SOLD/Closed to home Buyers…not Sellers) – I’m the Denver Metro Realtor that specializes in helping renters & first-time home buyers to “fix their credit” - so I can help them BUY their beautiful homes!  I enjoy finance work, and have an undergraduate degree from

The Ohio State University in Business, and a MBA in Business.  I work 98% of my time specializing helping renters & first

time home buyers.  Do you know what the “secret” to my success is?  Well, I owned my mortgage company from 1998 to 2009 and learned from the top Industry Experts to became a professional credit repair specialist. For 20 years, I continue to help renters to LEGITIMATELY repair their old nagging credit issues - so they can BUY a beautiful home instead!  I genuinely enjoy helping renters - and I take great pride in helping people who are “first time” home buyers!

 

                                                                                          The first thing we need to do, is to break down that $2,693 monthly 

                                                                                          mortgage payment – and use the IRS Form 1040 and the Schedule A to

                                                                                          calculate your specific TAX DEDUCTIONS, to get to that $334 monthly

                                                                                          payment. I’m not sure how many of you “Itemize your Deductions” on your

                                                                                          taxes currently as renters, but as Home Owners – you will Itemize ALL your

                                                                                          allowable deductions!!  Google the IRS 1040 and Schedule A for tax year

                                                                                          2019, and fill them both out – to “prove” to yourself a $334 house payment

                                                                                          is possible.

 

                                                                                          Buying a house entitles you to “Itemize” and Write-Off these items:  Interest

                                                                                          on your loan, Property Taxes, FHA Mortgage Insurance + plus an “added

                                                                                          bonus” of Writing Off your State of Colorado Income Tax, from your Federal

                                                                                          Income Tax owed!!  

 

Here’s how it works… 

 

Interest  - the Interest on the $2,693 PITI payment is $17,868 total a year. (You need to Google “amortization table”: $400,000 loan, do a 4.5% interest rate, 30 year loan.) Your P & I is $2,027 a month - of which, about $538 is Principle and about $1,489 is Interest (take $1,489 x 12 months = $17,868.)

 

You will enter $17,868 in Line 8a, Schedule A - Home Mortgage Interest and Points.

 

FHA MIP (Mortgage Insurance Premiums) -  you are allowed to deduct BOTH the Upfront FHA MIP and the Monthly MIP payments. On a $400,000 loan – the Monthly MIP was $283/month x 12 = $3,396.  The Upfront MIP is $7,000 on a $400,000 loan, but divided by 7 year term = $1,000/year.  So - you have $3,396 + $1,000 = $4,396 total that goes on the Schedule A, Line 8a, from the Form 1098 your mortgage lender will send you!

 

Property Taxes  -  you are allowed to deduct the Property Taxes on your home, which were $159/month x 12 = $1,908. You put $1,908 on Line 6, Schedule A.

 

BONUS “Itemization” Deduction  - because you now “Itemize” your

deductions, you are allowed to “Write-Off” your State of Colorado Personal

Income Tax. The maximum annual household income on the $1,000

Down FHA loan is $115,000, we’ll use a lower household income. So,

on Colorado income taxes you take 4.63% of $90,000 income = $4,167.

We put that $4,167 amount as your deduction on Line 5a, Schedule A.

 

So, here are the amounts you’ll deduct - $17,868 + $4,396 + $1,908 +

$4,167 = $28,312 in TOTAL WRITE-OFF’s buying your home.

 

Take $28,312 and it goes to Line 8, page 2, of the 1040 Form – “Itemized

Deductions”.  That’s the MASSIVE Tax Deduction and financial benefit you

get for buying a $400,000 home!!  But it gets better…

 

Let’s compare that $2,693 monthly PITI house payment - to the ACTUAL Tax Benefit you get.  So, take $28,312 and divide it by 12 months = $2,359.  WOW!!!  That’s enormous!!!

 

Now – your house payment is $2,693, so we subtract your actual tax benefit of $2,359 = $334 net house payment.

 

That $2,359 is REAL MONEY – not smoke & mirrors – or hocus pocus!  You can go to your employers and CHANGE your W-4 Employee’s Withholding Allowance Certificate.  You and your spouse can divide up equally that $2,359 per month allowance – and you EACH get to “take home” an additional $1,179 per month!!! ($2,359 divided 2 = $1,179.)

 

                                                                                          How can that be?  How is it possible a $2,693 monthly house payment –

                                                                                          truly nets a $334 house payment, when you “Itemize” and deduct ALL your

                                                                                          allowable deductions?!

 

                                                                                          It seems ILLEGAL!!!                                                                                   

                                                                                                                                                                                       

                                                                                          Jeff, surely you’re CRAZY – and are doing something wrong here?

 

                                                                                          But, it’s NOT wrong or illegal!! 

 

                                                                                          You’re going to get a MASSIVE $28,312 tax deduction every year as a      

                                                                                          home owner!!  You’ll get a $28,312 check BACK from the IRS, if you DON’T

                                                                                          change your W-4’s!!!

 

Compare that to Renting vs Buying a $400,000 home. If you're paying $2,000/month for rent - you're spending $24,000 in rent a year!  Is there any “reason” you can tell me, that you want to keep renting?  So – since Credit Report problems are the #1 reason ‘why’ so many families pay rent - when they could be “home buying” instead, call me at 303-622-5700, and let’s talk about your specific financial and credit report situation!

 

Let’s get GOING on getting you “Pre-Approved” too – being a Home Owner is awesome!!  Oh, and don’t forget, your $400,000 home will appreciate about 10% a year too (That’s the average for nicer neighborhoods the past 4 years.)  You could use another $40,000 or so in appreciation & home equity - right?!

 

Call, text or email me now – and let’s talk about YOUR specific renting/home

buying situation – and turn YOU into a Home Owner, instead of a frustrated

renter. 

 

Thanks again!   

     Jeff

 

Jeff Boyce

(303) 622-5700

jeffboyceRealtor@gmail.com

“$100+ Million Personally SOLD/Closed Since 1998”

See it explained on Youtube:

© 2018 by Jeff Boyce

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