[Calc Review] Holding cost question.
5 Replies
Daniel Hargraves
posted about 1 year ago
*This link comes directly from our calculators, based on information input by the member who posted.
Christopher Phillips
Real Estate Agent from Garden City, New York
replied about 1 year ago
Originally posted by @Daniel Hargraves :
*This link comes directly from our calculators, based on information input by the member who posted.
What's the question?
Daniel Hargraves
replied about 1 year ago
Sorry. I wrote it in the wrong place. And it’s not showing in the post. My question is, in the holding cost breakdown, does the loan payment need to include both the Principal and interest? Or just interest? My assumption is just interest. Since the principal goes towards paying off the mortgage. But I wanted to double check
Christopher Phillips
Real Estate Agent from Garden City, New York
replied about 1 year ago
Originally posted by @Daniel Hargraves :@Christopher Phillips
Sorry. I wrote it in the wrong place. And it’s not showing in the post. My question is, in the holding cost breakdown, does the loan payment need to include both the Principal and interest? Or just interest? My assumption is just interest. Since the principal goes towards paying off the mortgage. But I wanted to double check
Holding costs are everything it cost you to hold the property until you sell it. Principle, Interest, Taxes, Insurance, Utilities, Security Services, potentially HOA fees.
Some people do interest only loans, so they wouldn't need to include principle.
Daniel Hargraves
replied about 1 year ago
Ok, but how is the payment made on the principal considered a cost? Would that not be going towards equity? Since when you sell you won’t be left owing as much to pay off the loan?
Christopher Phillips
Real Estate Agent from Garden City, New York
replied about 1 year ago
Originally posted by @Daniel Hargraves :@Christopher Phillips
Ok, but how is the payment made on the principal considered a cost? Would that not be going towards equity? Since when you sell you won’t be left owing as much to pay off the loan?
Analysis is based on cashflows. Mortgage payments are cash payments going out. There is no assumption of equity until you sell.