Not only does owning a home give you a haven for yourself and your family, it also makes great financial sense because of the tax benefits – which you can’t take advantage of when paying rent.
The following calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too. Based on your current rent, use this calculation to figure out how much mortgage you can afford.
Rent: __________________________
Multiplier: x 1.32
Mortgage payment: _________________________
Because of tax deductions, you can make a mortgage payment – including taxes and insurance – that is approximately one-third larger than your current rent payment and end up with the same amount of income.
For more help, use Fannie Mae’s online mortgage calculators.
Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2008. All rights reserved.