This is a roundup of basic questions about EstiCost™. If your question does not appear below, or if the answer given is insufficient, please contact us.
Will EstiCost™ run on my computer?
EstiCost™ actually runs on our server, not on your computer. So your hardware or operating system should not be an issue. It should be compatible with all popular web browsers, and we routinely test it with Firefox, Miscrosoft Internet Explorer, Opera and Lynx. If you have trouble using EstiCost™ with one of these, or with any other browser, please let us know.
How true is "true cost"?
EstiCost™ cannot attempt to address costs not included in its inputs, and the only number it uses for the amount financed is the purchase price less the down payment, so financing of filing fees, closing costs, transfer taxes, etc., cannot be allowed for. EstiCost™ tends to be more sensitive to interest rate than to tax bracket, though both are certainly important, so it may be more important to show the lowest possible interest rate the buyer can reasonably expect to get than to pin down their tax bracket precisely.
Is my data sticky, and what does that mean?
If you do not want to keep using the same data from earlier in your session, just click the Clear button in the upper righthand corner of the calculator panel. Don't forget to re-select a home type besides entering new numbers.
As soon as possible, we will implement a personal-database feature that will let you keep a group of properties and/or financing deals that you've worked with. These will be kept on your computer, not ours, and will be based on cookies, so your browser will have to be set to accept them.
Can EstiCost™ be used with Canadian mortgages or biweekly-payment mortgages?
No. If enough interest is expressed, we will include these variations in a future version.
Can EstiCost™ be used with adjustable-rate mortgages (ARMs)?
Yes, but. The program's true-cost calculation — and the rent-vs.-buy decision, we'll wager — is based on the initial mortgage interest rate, so just use that as input. But make it clear that you're basing the estimate on that initial rate, and that later costs could be different.
Why is the adjustment for loss of interest on down payment optional?
It's not up to us to tell you how rosy or how grim a picture you want to see — that's a lawyer's or accountant's job. If you're a real-estate professional you may be required by regulators to reflect the loss of interest on the down payment in your illustrations, or you may just consider this adjustment essential to accuracy. Enter a nonzero number for Investment Interest Rate and you've exercised the option. Obviously, no default rate is given; use your own crystal ball.
When the loss-of-interest adjustment is used, is there also a counter-adjustment to reflect the fact that taxes will no longer be paid on that interest?
Is there a further adjustment, to treat that absence of taxes as an increment to income?
No. Enough is enough.
What are the differences in how the program handles the three types of home?
There's a pair of inputs particular to each type of home: maintenance and deductible percentage for a co-op, property taxes and common charges for a condo, property taxes and insurance for a house. Since common charges and insurance are both non-deductible, calculations for condo and house are equivalent, the difference being that these costs are more commonly stated on an annual basis for a house. Co-op calculations are entirely different, since the stated deductible percentage is usually the only clue as to what part of the maintenance charges is actually deductible (the part that goes for property taxes and, sometimes, interest on an underlying mortgage). Bear in mind that EstiCost™'s result is a general figure in each case. Any homebuyer (or seller) must consult his/her own lawyer or accountant for the most reliable numbers for the particular transaction.
How do I figure a homebuyer's (or my own) income tax bracket?
Ask a first approximation, don't try to figure it, just ask. Most people will be aware of their federal tax bracket. Then, when applicable, ask if they've included state and/or local income tax; they probably haven't, and if you believe that deductions are available in such cases you should add that. In other words, if state and/or local income taxes apply, with appropriate deductions for property tax and interest payments, make sure these tax rates are included with the federal tax bracket in the calculator's Income Tax Rate. Some websites that can help with estimating brackets, though we take no responsibility for their accuracy or timeliness, are www.bankrate.com/brm/itax/2005taxrates.asp (rates for 2005, as you can see, but probably still useful) , www.fairmark.com/begin/bracket.htm and, of course, Internal Revenue Service resources at www.irs.gov. If you're the seller or broker, remember that many people will not care to divulge household income early in a relationship, and that individual circumstances can easily vary enough to throw things off. In most cases, you can pick a default bracket for people qualified to buy a given residence, and use that, so long as you are making it plain that EstiCost™ shows an example, not a guarantee. Again, professional legal or accounting advice that takes all circumstances into account is what you or your prospect should ultimately rely on.
I can get the same results on my HP-12C calculator. Why should I use your online calculator instead?
Because looking at results on the 12C (or 19B, or equivalent from another maker) will show you nothing but a bunch of buttons and one unlabeled number at a time. The same goes for using one of the many financial-calculator emulation programs available for PDA's. But when you look at results on EstiCost™ you will see labeled inputs for the property and for your own situation (or your prospects'), along with three critical, well-marked outputs: the monthly mortgage payment, the total monthly outgo and the estimated after-tax monthly cost. EstiCost™ shows everything at once, and makes it easy to understand. Besides that, it lets you change inputs for revised scenarios quickly and easily.
Why can't I keep a database of properties and their numbers and/or a database of buyers and their characteristics?
This feature will be implemented as soon as possible. It will require that your browser accept cookies.
Any known problems?
Not at this time.
Any final words?
Just a reminder: EstiCost™ output is an example, a guideline for homebuyers — never a promise to them. You must understand and make it clear to others that one must consult one's own lawyer or accountant for definitive tax advice on any possible transaction.
Thank you for your interest in EstiCost™! Back to the calculator.