San Diego Housing Market News and Analysis
shocking calculation - present value of my low mortgage rate and prop tax
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Submitted by gzz on July 12, 2018 - 3:36pm
Just ran the numbers on my primary and first home to see how much my below market assessment and below market 30 year mortgage are worth.
Don't want to use my exact numbers, but I'll just use some in the ballpark:
purchase price 450k
On taxes, I am paying about 5k less per year than a new owner would. Present value of that is about $100,000!
My mortgage interest is about $4k less per year, but unlike the property tax difference, it will decrease each year and eventually hit zero. Calculating the property tax present value is easy as it is simply doing a perpetuity.
For the present value of a below market mortgage, here is an article on the more complicated calculation:
I could not find an online calculator that runs it for you, however the ballpark figure looks to be about $50,000.
Add these together, and my house/mortgage are worth about $150,000 to me than to a new buyer, that is a solid 1/6 of my home's market value and 1/3 of the purchase price.
My numbers are probably a bit on the high side since my purchase timing and mortgage refi were both timed well. But I do not think they are too far from typical.
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