# Calculating Possible Future Housing Expenses

//Calculating Possible Future Housing Expenses

## Calculating Possible Future Housing Expenses

The Wife and I have been giving serious thought to listing our house after the new year, and it was in the course of a recent discussion that The Wife told me she just wanted to know the “bottom line” in terms of future housing costs.  Her concern is that an upgrade to our current living situation will detrimentally affect our lives.

Right now, The Wife gets to spend a lot of time with our boy all while we are saving more money each month than ever before, all while having a lifestyle that never has us questioning whether we can “afford” the little extras.  Her, very valid and responsible fear, is that a larger mortgage will put us at odds with our long time goal of financial freedom.

Currently, our housing (mortgage, taxes and condominium maintenance) costs us about \$2,100.  This does not include utilities, or other ancillary expenses.  As soon as everyone reads that number they will have a gut feeling.  Either they will be shocked that I pay that much for a 2 bedroom condo (if you live in most of the country) or you will think I pay next to nothing if you live in a major city on one of the coasts.

Since we have to start somewhere, I decided to use a standard 30year 5% mortgage, although, The Wife and I have talked about strategically using some type of Adjustable Rate Product, which would lower our rate.

Since property taxes on Long Island are not insiginficant I used two variations to provide her with a range.  Also, since down payment may vary I have provided down payments of both 20% and 25%.

## Calculating our Possible Future Housing Expenses

### With \$9,000 in Property Taxes

 House Value Down Payment Mortgage Amount Monthly Mortgage Assumed Taxes Monthly Difference \$400,000 \$80,000 \$320,000 \$1,717 \$9,000 \$467 \$400,000 \$100,000 \$300,000 \$1,610 \$9,000 \$260 \$450,000 \$90,000 \$360,000 \$1,932 \$9,000 \$582 \$450,000 \$112,500 \$337,500 \$1,811 \$9,000 \$461 \$500,000 \$100,000 \$400,000 \$2,147 \$9,000 \$797 \$500,000 \$125,000 \$375,000 \$2,013 \$9,000 \$663

### With \$12,000 in Property Taxes

 House Value Down Payment Mortgage Amount Monthly Mortgage Assumed Taxes Monthly Difference \$400,000 \$80,000 \$320,000 \$1,717 \$12,000 \$717 \$400,000 \$100,000 \$300,000 \$1,610 \$12,000 \$510 \$450,000 \$90,000 \$360,000 \$1,932 \$12,000 \$832 \$450,000 \$112,500 \$337,500 \$1,811 \$12,000 \$711 \$500,000 \$100,000 \$400,000 \$2,147 \$12,000 \$1,047 \$500,000 \$125,000 \$375,000 \$2,013 \$12,000 \$913

## What Will Affect Our Future Housing Costs

I know it probably seems obvious but:

1. The mortgage rate we receive.  On a \$300,000 mortgage (so the \$400K – \$100K down payment) if we were to get a loan at 4% it would reduce the monthly expense by \$178.  This would make the difference between the two options \$82 and \$332.  On a \$400,000 mortgage (so the \$500K – \$100K down payment) the payment would be lowered by \$238.
2. Our Property Taxes.  I don’t think we are going to go higher than \$12,000 per year, but if property taxes were down to \$8,000 then it would reduce all the above numbers by \$83.
3. The Down payment.  I am not sure if we will have enough time to save enough to get higher than the 20 – 25% down payment provided in the examples.    The Wife or I would need to have some crazy months and it isn’t looking like it will turn out that way.

Prior to doing this exercise I thought we would could be in the \$500,000 to \$525,000 range and the Wife’s gut (which turned out to be pretty close to accurate) told her that our sweet spot would be a closing price of around \$425,000. My math makes me believe that we can go a bit higher than what The Wife thought but lower than my original guess.  It will come down to the taxes since the mortgage is just a simple math problem.

By | 2012-10-31T14:45:24+00:00 December 12th, 2011|Personal Finance|19 Comments

### About the Author: Evan

Evan is the owner of My Journey to Millions which was started to track his journey from a broke debt ridden law school graduate to building a positive balance. Need more Evan? Follow him on Twitter, Contact him or get new posts directly to your email

1. Eric J. Nisall December 12, 2011 at 11:29 am - Reply

Dude, you should move down to South FL, you could probably afford a penthouse down here. The way the market is, you could get a really good deal and keep the RE taxes down because of it. Even before the crash, the taxes down here weren’t as bad as up in NY. And no shoveling either!

• Evan December 13, 2011 at 2:29 pm - Reply

South Florida? Awesome place to visit and party but I am not sure this guy can take the heat!

Plus then I would need to find a new job lol

• Eric J. Nisall December 13, 2011 at 10:12 pm - Reply

I hear that. I get real pissed this time of year since it’s still in the upper 70’s all day. At least last year it got below freezing for a few stretches of “winter”

2. Jeff December 12, 2011 at 12:30 pm - Reply

I am from one of those areas that thinks you’ve got an expensive condo. It’s always nice to know how much you can spend before you start shopping, and jsut as important know what you’re going to be putting at risk or potentially giving up, and at that point you can decide if it’s worth it.
the amount you’re looking at spending 400k – can get you a building on a prime downtown corner where I live (4 floors high) or probably 50+ acres with a large house.

• Evan December 13, 2011 at 2:30 pm - Reply

50 Acres? Holy shit where do you live?

3. 20's Finances December 12, 2011 at 1:04 pm - Reply

Yes, I know the high tax thing all too well. I hate it… If I lived in another part of the country, I would be a home owner (well, with a mortgage). But at last, I am stuck renting – and you know the problems I’ve had renting.

• Evan December 13, 2011 at 2:31 pm - Reply

Where do you live?

• 20's Finances December 14, 2011 at 7:52 am - Reply

NJ.

4. retirebyforty December 12, 2011 at 3:58 pm - Reply

That’s about how much we are paying on our condo as well. That property tax is nuts though.

• Evan December 13, 2011 at 2:39 pm - Reply

My current property taxes are about \$4,500 those numbers represent the new taxes.

5. krantcents December 12, 2011 at 7:34 pm - Reply

Your problem is you want a good school district which usually means high taxes. As a ex New Yorker, I understand the problem better than most.

• Evan December 13, 2011 at 2:40 pm - Reply

Thank you for feeling my pain! When did you get out? where are you living now

6. JP December 12, 2011 at 10:54 pm - Reply

That’s about comparable with Chicago. Though the taxes might be a bit higher. Which can always be contested. Over the next 1-2 years is the right time to look and buy though.

• Evan December 13, 2011 at 2:49 pm - Reply

Are you in chicago or right outside? I am 40 mins from NYC

• JP December 14, 2011 at 9:49 am - Reply

In the city, but suburbs span 5 counties that all have pockets with similar prices.

7. Barb Friedberg December 13, 2011 at 1:40 am - Reply

If you may have more kids, the interest rates can’t be beat now! But, I understand the wifes hesitancy. This is a tough one. We left San Diego when our daughter was 3 for a lower cost of living area! Now, we’re back in a high cost of living area (and loving it).

• Evan December 13, 2011 at 2:58 pm - Reply

How old are the kids? are you paying for them too?

8. AverageJoeMoney December 13, 2011 at 9:47 pm - Reply

I think another question here, too, is if you’re going to upgrade the house, when is the right time? If the economy continues to rebound, upgrading sooner rather than two years from now may be to your advantage.

FYI: I went to grab a beer when I saw your “new” tax bill. Ouch.

• Evan December 18, 2011 at 9:42 pm - Reply

You are 100% correct…which is why we are thinking about making this move.

FYI: Writing out those numbers made me want to grab a beer also LOL