How You can Realistically Become a Millionaire with the “Smart Home Program”

Using the “Smart Home Program” of income generation coupled with the tools that can help reduce the cost and length of paying off a mortgage, we show you how a $240,000 mortgage can be paid off in as little as 15 years or even less.

The following explanation will give an abbreviated but fairly thorough description of how this can be achieved.

First, you need to be aware of the importance of owning a home. We all need to live somewhere, and if you don’t own a home you most likely will have to rent, which in many instances can be as expensive as owning a home. Beside, with renting you build no ownership value (equity). However, using the combined tools of income generation, tax deductions (tax savings via property depreciation, mortgage interest deductions, etc.) buying down a mortgage and increased property valuation, your home becomes a powerful saving account that builds great value over time. Now, let’s show how you can realistically become a millionaire.

“Smart Home” plans typically feature a standard home plan with an added “in-law” living area. The “Smart Home” plans featured in the Blessed Home Program start as low as 2,000 sq. ft and up.  Depending on where you live, such a home based apartment should generate between $500 to upwards $1,000 monthly. Being conservative, let’s say we can achieve a $750 income from the rental unit. Presently, mortgage rates have dropped to the lowest levels in years. The average rate today falls between 3%to 4% for a standard 30 year mortgage. With excellent credit, one can even obtain a mortgage as low as 2.5%. Again, being conservative, let’s use a 3.5% mortgage interest rate.

Tax Deduction Benefit

One of the first savings you can realize is a mortgage interest tax deduction. A mortgage at 3.5% will total $147,975 of interest in 30 years. This averages out to $4,932 in interest cost per year. Using 2019 tax rates, if your total income falls under $78,951, your tax rate will be 12%. But if above this number, your tax rate goes up 10% to 22%. For example, if you made $80,000 yearly, subtracting a $4,932 home interest deduction from your gross income would reduce your taxable income to $75,068 thereby providing an additional 10% income tax deduction benefit, equaling $8,592. Therefore, this becomes an immediate added yearly income benefit to you.

Tax Deduction based on Depreciation

Another tax deduction is based on the depreciation that can be used for your rental property. Since the rental only uses a portion of the home, usually you have to use a percentage of the square footage of living area rented. In our example, we will not utilize this deduction, making our example even more conservative.

Buying Down a Mortgage

A mortgage works by initially collecting the majority interest of the loan in the early years of its existence, which is called an amortized loan. One way to beat a mortgage is to make additional payments over the life of it. The easiest way to show this is to compare a 30 year mortgage to a 15 year mortgage. For example, the total interest on a $240,000 30 year mortgage at 3.5% interest will cost $147,975. However, a 15 year mortgage will only cost $58,331 in interest! This equates to a $89,644 savings!!  That’s a significant amount.

We recommend “Smart Home” owners take out a 30 year mortgage to keep monthly payments low, yet making it a goal to pay it off in 15 years. However, if you can easily handle a 15 year mortgage, by all means do so as the interest rate will generally be one-half percent lower.

Let’s now see how it all adds up.  We’ll use a 15 year pay-off plan for the mortgage. If you generate $750/mo. from your rental, total income will equal $135,000 over a 15 year period. Subtract out your mortgage interest of $58,331 and you have a remaining profit of $76,669. Now, assume you can experience a 2% equity increase in your home yearly. $240,000 x 0.02 x 15 yr. = $72,000. After 15 years, add $240,000 + $72,000 = $312,000 + $76,669 (profit from rental) = $388,669. In 15 years your “Smart Home” is totally paid off and worth $388,669. Wow, what a savings plan!

Let’s see what happens if you continue this “concept” with the goal of paying an imaginary mortgage for another 15 years. This becomes your super savings program. Your imaginary mortgage will cost $1,078/mo based on a 30 year mortgage rate we initially took out. This adds a total of $194,040 profit in 15 years.  Keep in mind this is not a mortgage payment, but a savings payment.  Now, assume that you keep the rental at $750/mo, for a total of 15 years for an income of $135,000. Let’s say you can find an investment that pays 3% for you the imaginary mortgage savings plan and rental income. This adds another $85,526 of interest profit. House appreciation of 2% yearly on $388,669 over another 15 years yields another $134,277. Your total for all the above is $548,843. Add the $388,669 from the previous 15 years and you have a grand total of $937,512, nearly one million dollars!!! Wow again.

A few comments. We’ve tried to be relatively conservative in our calculations. As you’re probably aware, home equity value increases in places like California are much greater than 2% yearly. At the same time we realize that you probably will not have continuous rental income over the 30 years. But the point is to show the significant potential of the “Smart Home Program.” For further inquiry, check out our website at BlessedHomeProgram.com or give us a call. We would be happy to refer you to the parties concerned.