How to Make a $3,000 Higher Mortgage Payment Feel Smaller

I speak with many homeowners who have a low rate now and want to make a move up, but the new payments are too high to justify the price differential. This is the question I get from many homeowners who are trying to upgrade their home:

"If my new home only costs $200,000 more than my current one, why would my payment jump by $3,000 a month?"

It's a fair concern, and on the surface, it feels like a tough pill to swallow. However, when we unpack the numbers, that $3,000 gap appears to be a lot smaller than you think.

The Scenario

• Current home: $825,000 value
• Loan Balance: $530,000
• Rate: 2.75%
• Payment: $3,400 (all-in, including Taxes/Insurance)

Now, they're considering moving up to a $1,000,000 home:

• Down Payment: $200,000
• New Payment: $6,366 (P&I, Taxes, Insurance)

That’s about $3,000 more per month. Let’s break down this number.

Step 1: The Tax Advantage

Currently, they’re only deducting approximately $14,000 in mortgage interest annually. On the new home, the year-one interest will be about $49,000 more.

Add in the additional property tax deduction (roughly $4,375), and that's $40,000 in potential extra deductions.

Depending on their tax bracket, this could reduce their net cost by $1,000+ a month.

Step 2: Appreciation Compounds

Appreciation isn't just a percentage - it’s a dollar figure tied to the home's value.

• $825K home at 4% annual growth = ~$33,000/year
• $1M home at 4% annual growth = ~$40,000/year

That's $7,000 more equity growth per year - just by owning the more expensive home.

Step 3: Future Rate Relief

Rates are higher today, but they won’t remain this high forever. With every half-point drop, the Payment could fall by hundreds.

That $6,366 number isn't locked in forever; it's just the starting point.

Did You Know

Oktoberfest is October 22nd from 5:30-8:30 at our office?

So, Is It Really $3,000 More?

When you add everything up:

• Tax savings: ~$1,000+ /mo
• Extra appreciation: ~$583 /mo
• Future refinance savings: TBD, but $250.00 for ever .5% drop. So likely another ~$500 - 1,000 /mo

The "real" net increase appears to be closer to $417(with rates in the low 4’s) - $ 1,417 per month (assuming no refinance), with far more upside in long-term wealth growth.

The Big Picture

Buying a move-up home isn’t just about the monthly Payment, it’s about building equity, wealth, and opportunity.

Yes, the payment number can feel intimidating at first. But when you factor in tax benefits, appreciation, and the fact that rates will eventually fall, that extra cost is much smaller than it looks on paper.

Do you have clients considering an upgrade to their home? Let me sit with them and review the numbers, and help them reach their desired destination. Don’t let a lesser lender ruin another opportunity for you and your clients!

Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

But wait, there’s more…

Interest Rates

We are trying to close out our first good day in the market since last Monday!  Rates are down a tad, but we have a long way to go to get back to where we were last Monday!

Oktoberfest is October  22nd! Yes, I will slide this in anywhere I can! LOL!

Loan Programs

• We do loans on Non-warrantable condos!
• We offer 12-day escrows for pre-approved buyers, including conventional FHA/Jumbo/Bridge loans.
• We provide loans in all 50 states, so call me with anything you need.
• Government loans (FHA/VA/USDA) are in the 5s.
• Conventional loans up to $806,500 are in the high 5’s and low 6s.
• High-balance loans from $806,501 to $1,209,750 are also in the 6’s.
• Jumbo loans above $1,209,750 are in the 6’s.
• ARMS in the 5’s and some in the 6’s
• Bank statement loans are available with 10% down again, with larger down payments in the 6’s++.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No-Ratio Loans require a 30% down payment.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

**Good News for Condos:**   

NONE

**Bad News for Condos***     

Brookside Walk – Naughty once again! As they got rid of their 5% Maximum deductible on Insurance.

Camelot  – 2396 Pleasant Way, Thousand Oaks – Insurance does not meet the requirements in the selling guide

CONDO HELP!!!

If you have a listing or a buyer interested in a specific condo and are unsure whether it is warrantable or Non-warrantable, please call me, and we can look up Fannie’s list in real-time. I have already done that on three condos today, and my list was accurate on all 3. We don’t know when something has changed, and it would be impossible to track everything on a day-by-day basis, but we don’t mind looking up a few items each day.

The full state of California’s naughty list has been added to: MikeMeena.com! See the link below:

https://mikemeena.com/non-warrantable-condos/

Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!