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Author: EvanED Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127236  
Subject: Re: When can I qualify for a loan? Date: 4/26/2013 12:11 AM
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@TFMPMarti

You've stated the pro of putting responses to multiple posts in one. The con is that the person you're responding to may miss it if (s)he is working from the "responses to your posts" link.

OK. I'll keep doing it this way then unless I get complaints. :-)

Speaking of responses, if you responded to my suggestion of a way around the Roth IRA contribution income limit I missed it. I'm bringing it up only because it may have gotten lost in the excellent rent/own discussion that's been going on. If you'd like to pursue it, either here or on the Tax Strategies board http://boards.fool.com/tax-strategies-100155.aspx?mid=306512...... just let me know.

I meant to respond but I guess I didn't. (The thread has gotten a lot crazier than I expected :-), but in a good way.) My guess from what you said originally is that it won't apply -- the Roth is all I have.

@aj485

I'm not sure that I would have actually listened, much less have done anything differently, but it would have given me another viewpoint that was completely different than the viewpoints that I got at the time.

I appreciate the guidance at least. Maybe I'll toss around the idea of putting a little less down so I've got a bit of money at least.

Add in your property taxes, an income tax (if your state has one) or sales tax deduction, and some charitable giving, and you might get some benefit. But even if you can deduct $5k over the standard deduction (meaning you had $11,100 in deductions), if you are in the 25% bracket, you will have saved $1,250 in taxes. That's about 0.625% of your home's value. Without any major improvement projects, I spend about 2% of my home's value in maintainence and repairs a year on average. Even if you were only to spend 1%, the tax savings is still $750 short.

Those figures are low for my situation. At $110K/year, (1) I'll be well into the 28% bracket, not 25%, and (2) the state income tax deduction alone should take me above the standard deduction. (Lucky me?) This means I should get the full benefit of the property tax and mortgage interest deductions (~$1300 and ~$1600 off tax under your $200K assumption). In addition, I would get another $250 or $300 as a mortgage interest deduction on state taxes.

That's not quite at the 2% you quote (comes to 1.6%), but it's not that far off. And it also ignores the equity part of the "buy" scenario.
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