Why A Mortgage is (Usually) Your Best Source of Funds Return to Report Center A new report has just been released which explains in detail why a mortgage is usually your best source of money. Learn from concrete illustrations and examples which analyze the cash flow and interest rate and tax considerations in many scenarios.  Learn how to use your home mortgage as a bank to borrow at an after tax apr way below any other source. See in detail what credit cards, car loans, personal loans are costing you and the alternatives and the risks involved with each source of money. Learn how to determine the best mortgage rate and terms for your individual situation. One size does not fit all!    Learn how your home "bank account" grows and appreciates every month and how to utilize this tremendous power in your financial future.                P.S. Congress has enacted tax laws that make the transfer of debt from a non tax deductible source to a mortgage extremely advantageous but not in All situations. There are things that you must know and factors to consider to make the right decision. This report will guide you through the decision making process

 

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EXAMPLE - Mortgage Tax Savings $300,000 mortgage, 28% federal & state tax rate, closing costs of $8,000.

Your first year tax savings is $6,272.36. Total interest paid in the first year would be $19,401.28. You also paid $3,000.00 for 1.00 discount point(s). With a combined state and federal tax rate of 28.00%*, you could save $6,272.36 in the first year. Your average tax savings over the 30-year loan term is $3,599.28 per year. Your effective interest rate after taxes is 4.680%. Your APR is 6.755% for this loan. After taxes your APR is 4.864%. Annual Percentage Rate (APR) is a standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. Likewise, a loan with a higher stated rate with very low fees could be an exceptional value. APR calculations incorporate these fees into a single rate. You can then compare loans with different fees, rates or different terms. While APR calculations may vary from lender to lender to a small degree, all lenders must follow the same basic rules. Your effective income tax rate assumes that you are able deduct your state and local taxes from your Federal income taxes. This produces a lower effective tax rate than simply adding your Federal, state and local taxes together. The calculation we use is: State and local income tax rate X (1- Federal income tax rate) + Federal income tax rate. In your case this produces an effective tax rate of 28.00%. Mortgage Summary Mortgage Information Loan amount $300,000.00 Term 30 years Interest rate 6.500% After tax rate 4.680% Monthly payment $1,896.20 First year interest $19,401.28 First year tax savings $6,272.36* *Tax savings assumes that you qualify for a home interest deduction and that you itemize your taxes on schedule A of your Federal tax return. The maximum mortgage debt for which interest is deductible is limited to $1,000,000. Total tax savings may be less for higher incomes that have their allowable itemized deductions phased out. Your total tax savings may also be reduced if you prepay your loan.   Closing Costs Origination fee $3,000.00 Paid for points $3,000.00 Other fees $2,000.00 Total closing costs $8,000.00   Payment Schedule Year Total Payments Principal Paid Interest Paid Ending Principal Balance         $300,000.00 1 $22,754.40 $3,353.12 $19,401.28 $296,646.88 2 $22,754.40 $3,577.68 $19,176.72 $293,069.20 3 $22,754.40 $3,817.29 $18,937.11 $289,251.91 4 $22,754.40 $4,072.94 $18,681.46 $285,178.97 5 $22,754.40 $4,345.71 $18,408.69 $280,833.26 6 $22,754.40 $4,636.75 $18,117.65 $276,196.51 7 $22,754.40 $4,947.30 $17,807.10 $271,249.21 8 $22,754.40 $5,278.62 $17,475.78 $265,970.59 9 $22,754.40 $5,632.13 $17,122.27 $260,338.46 10 $22,754.40 $6,009.32 $16,745.08 $254,329.14 11 $22,754.40 $6,411.79 $16,342.61 $247,917.35 12 $22,754.40 $6,841.18 $15,913.22 $241,076.17 13 $22,754.40 $7,299.36 $15,455.04 $233,776.81 14 $22,754.40 $7,788.20 $14,966.20 $225,988.61 15 $22,754.40 $8,309.84 $14,444.56 $217,678.77 16 $22,754.40 $8,866.33 $13,888.07 $208,812.44 17 $22,754.40 $9,460.12 $13,294.28 $199,352.32 18 $22,754.40 $10,093.70 $12,660.70 $189,258.62 19 $22,754.40 $10,769.69 $11,984.71 $178,488.93 20 $22,754.40 $11,490.95 $11,263.45 $166,997.98 21 $22,754.40 $12,260.53 $10,493.87 $154,737.45 22 $22,754.40 $13,081.64 $9,672.76 $141,655.81 23 $22,754.40 $13,957.73 $8,796.67 $127,698.08 24 $22,754.40 $14,892.51 $7,861.89 $112,805.57 25 $22,754.40 $15,889.89 $6,864.51 $96,915.68 26 $22,754.40 $16,954.05 $5,800.35 $79,961.63 27 $22,754.40 $18,089.49 $4,664.91 $61,872.14 28 $22,754.40 $19,300.99 $3,453.41 $42,571.15 29 $22,754.40 $20,593.64 $2,160.76 $21,977.51 30 $22,759.11 $21,977.51 $781.60 $0.00

P.S. Credit card payments and interest are usually not tax deductable.

Think of how much money you'll save by transferring debt to a mortgage.

 

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