shocking calculation - present value of my low mortgage rate and prop tax

User Forum Topic
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
current price 900k
mortgage 300k @ 3.4%
market rate: 4.75%

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:
https://en.wikipedia.org/wiki/Mortgage_A...

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.

Submitted by scaredyclassic on July 13, 2018 - 7:23am.

wow. you made me feel wealthier.

on the downside, i cant ever leave

Submitted by moneymaker on July 13, 2018 - 7:34am.

The only way to leave that makes sense is to rent it out and move out of state to a cheaper place, Mexico if you speak Spanish. My problem is I hate to move, if I win the lottery I may have to though. If you were to win the lottery, where would you live? My timing has been really good, because I bought in 2009, got the $8000 stimulus, ref'd to a 15 year at 2.625% and now that my write off is declining I'll be able to use the higher standard deduction next year, maybe.

Submitted by scaredyclassic on July 13, 2018 - 7:52am.

san miguel de allende?

alaska for tax purposes?

into my brothers house back east?

laguna beach?

naah. temecula rules.

Submitted by FlyerInHi on July 13, 2018 - 11:06am.

Mexico is perfect in many ways because it's so close. But I really don't like Mexican food other than a few items. Too fat!

The big USA metros have a good choice of food thanks to our immigrants populations.

I was looking at videos of Denmark. I think Bernie Sanders is right. It's pretty nice there with beautiful old and new architecture. And slim people who bike a lot. Scaredy, I think Denmark is good for you.

Submitted by gzz on July 13, 2018 - 11:28am.

Scaredy: our left-wing Pigg lives in Temecula?!?

Flyer: I speak Spanish and love Mexico. But also not a fan of the traditional rice/tortilla carby food. Tortilla factories also smell awful. Beans are fine in moderation, and the meat dishes are good.

That wouldn't deter me from moving there, Mexicans are embracing sushi and Italian food, and to a smaller extent tapas and vegetarian and "New American." They also have plenty of junkfood Chinese, but I avoid them in any country. Never seen a nice Chinese restaurant there.

About two miles past the old tourist downtown area in TJ, by the fancy Plaza Rio mall, is a newer area that feels like gaslamp with dozens of bars that focus on strong high end beers and fancy cocktails. I didn't like it, too crowded and loud, but shows more Americanization of food and drink culture.

Submitted by scaredyclassic on July 13, 2018 - 12:59pm.

i will never leave temecula, unless it's for assisted living or some future unborn grandkid needs childcare. i love this town. i will hopefully die here. i cant start over anywhere. temecula just makes sense.

safe.
clean.
beautiful.
near mountains and ocean.

my house is cheap, 1.1% taxes, 3.375% mtg.,amazing taco shop right nearby, costco.

beer n wine, old town.

i love u temecula. contemplating a city council run.

Submitted by scaredyclassic on July 13, 2018 - 12:52pm.

FlyerInHi wrote:
Mexico is perfect in many ways because it's so close. But I really don't like Mexican food other than a few items. Too fat!

The big USA metros have a good choice of food thanks to our immigrants populations.

I was looking at videos of Denmark. I think Bernie Sanders is right. It's pretty nice there with beautiful old and new architecture. And slim people who bike a lot. Scaredy, I think Denmark is good for you.

bbicycling here is WORLD CLASS ...tdf defrocked winner FLOYD LANDIS trained here for years. denmark is flat. temecula builds strong hilly hearts.

Submitted by The-Shoveler on July 13, 2018 - 1:46pm.

Been to Demark, Not really into the Bar/Beer scene.

Maybe that's why it seemed kind of boring to me.

Too cold as well.

To each their own I guess, I do like having a beer out on the patio with a few friends.

I guess that's why suburbs work for me.

Submitted by gzz on July 13, 2018 - 3:50pm.

In your run, center your platform on AirBNBs on every block, up to five renters per bedroom (ten per converted garage), parties OK as long as they start to quiet down by 3am, and making Temecula the official SoCal pre-Burning Man event.

HUGE economic boost. HUGE popularity. Peace Love Unity Respect.

I will help you rack up a landslide by having hundreds of burners register to vote in your AirStream trailer. They need to live there at least 90 days, so warn the taco shop to stock up.

Submitted by FlyerInHi on July 13, 2018 - 4:53pm.

Floyd Landia is obese now. Too much juicing.
Bike or walk everyday to and fro for health.

Airbnb airstream is a great idea. Build a deck and park the airstream next to it.
If you did a full hookup on your property, you’d make good money.

Submitted by FlyerInHi on July 13, 2018 - 5:02pm.

gzz, I’m learning Spanish. I would say I’m 20% fluent. Very useful in real estate because you can directly hire the tradesmen who speak Spanish. La esposa de mi contratista de granito me enseñó una nueva palabra: gavacho.

I like Mexico a lot. Want to visit valle de Guadalupe. Rent an Airbnb.

Submitted by scaredyclassic on July 13, 2018 - 6:16pm.

FREE FLOYD!

i saw him one time, near rainbow ca moving so fast up a hill it was startling. i couldnt go DOWNHILL like that...

these guys are,freaks of nature.

Submitted by gzz on July 16, 2018 - 4:29pm.

Flyer, I learned Spanish when I was 17-18 by taking 6 months of immersion in Mexico and living with a Mexican family. It was great, and my school is still operating almost 20 years later with some of the same staff.

They can set you up in a program with 3-4 hours a day of private lessons + 1-2 more of group lessons, and live with a local family that cooks for you three times a day, for a very reasonable price.

It was about $600 a month all in in late 90's prices, I'd guess more like $1200-1500 for a month now.

Submitted by FlyerInHi on July 17, 2018 - 12:53pm.

Scaredy, you can setup an airstream like this on your property.

https://www.airbnb.com/rooms/3406062

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.