You can probably own your own home in Las vegas for what you are paying in rent. What are some of the advantages of home ownership?
- Have pets
- Turn up the stereo
- Have a garden
- More space
- A garage
What can you afford? It depends on what you are comfortable paying per month. This is important, buy what you can afford; do not become a slave to house payments. Also, you do not need a lot of cash to get into a home; 100% loans are available so all you would need are the closing costs. What can you afford? The following three steps will give you a good idea but first, a word from Albert Einstein. Einstein once said: “Everything should be made as simple as possible, but not simpler.” Einstein wouldn't be too happy with the following because what you actually pay depends on more factors than I can include in this message including credit score, interest rates, the specific loan program and other such factors. However, the following three steps are accurate enough to give you a general idea of what is possible.
Step 1: Comfortable Payment
What are you comfortable paying per month? $1,000, $1,200, $1,500, $2,000? You decide. Remember not to “stretch”: a home should be a joy; not a financial millstone about your neck. Once you have that amount in mind, on to step 2.Step 2: Equivalent Mortgage
The following formula computes an Equivalent Mortgage payment from the Comfortable Payment you choose in Step 1. First, look up your tax rate based on your income in one of the two tables below depending on whether you file taxes as single person or jointly as a married couple.
|
Single |
|
Married Filing Jointly |
||
|
Taxable Income Ranges |
Federal Tax Rate |
|
Taxable Income Ranges |
Federal Tax Rate |
|
$0 – $7,5,50 |
10% |
|
$0 – $15,100 |
10% |
|
$7,551 – $30,650 |
15% |
|
$15,101 – $61,300 |
15% |
|
$30,651 – $74,200 |
25% |
|
$61,301 – $123,700 |
28% |
|
$74,201 – $154,800 |
28% |
|
$123,701 – $188,450 |
33% |
|
$154,801 – $336,550 |
33% |
|
$188,451 – $336,550 |
33% |
|
$336,551+ |
35% |
|
$336,551+ |
35% |
Second, compute the approximate Equivalent Mortgage payment using the following formula.
Equivalent Mortgage = Comfortable Payment X (Tax Rate+1)
For example, if your Comfortable Payment was $1,200 and you are single with an annual income of $55,000, the calculation would be as follows.
Equivalent Mortgage = $1,200X(25% +1) or $1,200X(1.25) or $1,500
If you did not understand the calculation, don't worry about it. Just understand that you can afford to pay more each month due to the tax benefits of home ownership without changing your current cash flow. Also, please understand that the above calculation is only approximate. Now that we have the Equivalent Mortgage, lets look up the price of home you can afford.
Step 3: What Can You Afford?
Slide down the left column in the table below until you find the range containing your Equivalent Mortgage. Immediately to the right is the approximate price of the home you can afford. For example, if your Equivalent Mortgage is $1,500, you could afford a home priced around $190,000. Look at sample Las Vegas Homes for an idea of what you can afford.
|
Mortgage Payment* |
Home Price |
|
$1,120 |
$150,000 |
|
$1,367 |
$175,000 |
|
$1,607 |
$200,000 |
|
$1,979 |
$250,000 |
|
$2,343 |
$300,000 |
|
$2,765 |
$350,000 |
|
$3,170 |
$400,000 |
|
* Includes estimated taxes, principal, interest and insurance. Association fees (if applicable) are not included. |
|
For many years, Las Vegas has been one of the hottest markets in the US making it very hard for first time home buyers. However, the recent slowdown in home sales has temporarily reduced prices in many areas but this won’t last long. Act now and you could be in your own home in 30 to 45 days. Call me today to get started.
Eric Fernwood
RE/MAX CENTRAL
Cell: 702-358-8884
Eric@ISellLVHomes.com
www.EricFernwood.com
Posted by Eric Fernwood 
