Welcome > Resources > Mortgage Calculators > Determine Tax Savings ...

Mortgage Tax Savings Calculator

Interest paid on a mortgage is tax deductible if you itemize on your on tax return. So are points that are paid to lower your interest rate. Use this calculator to determine how much you could save in income taxes. Click on the "View Report" button to view the results in detail.

Definitions

Mortgage amount

Original or expected balance for your mortgage. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). Any interest paid on first or second mortgages over this amount is not tax deductible. Home equity loans are limited to $100,000 or the amount of equity you have in your home. Our calculator limits your interest deduction to the interest payment that would be paid on a $1,000,000 mortgage.

Interest rate

Annual interest rate for this mortgage.

Interest rate after taxes

Annual effective interest rate after taxes are taken into account. Please note that in addition to the $1,000,000 mortgage debt limit, this calculator assumes that your itemized deductions will exceed the standard deduction for your income tax filing status. If your itemized deductions don't exceed your standard deduction, the benefit of deducting the interest on your home will be reduced or eliminated. For 2002 the standard deductions were $7,850 for married couples filing jointly, $3,925 for married couples filing separately, $4,700 for singles, and $6,900 for heads of household. You should also be aware that the total tax savings may be less for higher incomes that have their allowable itemized deductions phased out.

Term in years

The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.

Monthly payment

Monthly principal and interest payment (PI).

Federal tax rate:

The marginal federal tax rate you expect to pay.

State tax rate:

The marginal state tax rate you expect to pay.

Annual Percentage Rate (APR)

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.

APR after taxes

Annual percentage rate after taxes are taken into account. Unlike your after-tax interest rate, the APR after taxes takes closing costs into account.

Loan origination percent

The percent of your loan charged as a loan origination fee. For example, a 1% fee on a $120,000 loan would cost $1,200.

Discount points

Total number of "points" purchased to reduce your mortgage's interest rate. Each "point" costs 1% of your loan amount. As long as the points paid are not a broker's commission, they are considered tax deductible in the year that they were paid.

Other fees

Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest.

The mortgage calculators are provided by KJE Computer Solutions, LLC and made available to NUMBER1EXPERT as self-help tools for your independent use and are not intended to provide investment advice. We can't guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

"A model of how the Internet can facilitate the process of deciding where to send your children to school" - America's Best School Profiles by The Heritage Foundation Pennsylvania Public, Private and Charter Schools: Compare them using these top-rated, comprehensive reports.   Schools in North Penn School District, Wissahickon School District, Hatboro-Horsham School District and Lansdal

Financing Your Home >Mortgage Terms New mortgage loan products offer a more complex selection of terms. Lenders now offer mortgages that are blends of short-term ARMs and 30-year fixed-rate loans with a lower fixed-rate of interest for a period of five, seven or ten years. Be sure that you understand what happens at the end of the initial term before you sign on the dotted line for such a loan. Many of these loans revert to a 1-year adjustable rate loan at the end of the initial term and can be adjusted once a year based on an index tied to the cost of money. You should know how much over the index your rate will be set and the limit or cap on how much your payments can increase. A "balloon" note requires the entire balance to be paid to the lender after the initial period of the loan ends. Most of these loans require the lender to guarantee to refinance the note at that point if payments have been timely. The lender should spell out how the re-finance rate will be determined and what costs will be involved. These loans can help you buy a more expensive house than you could afford with a 30-year fixed rate mortgage, but be sure that you understand the terms and the potential risks. See All Tips In The "Financing Your Home" Category > See Complete Library Of Hundreds Of Tips In 30+ Categories >

Q  What famous $40+ million home has a 60-foot pool with underwater music and a 20-car garage? A  The home of Bill Gates, co-founder of Microsoft, features the latest futuristic computer technology. See More Real Estate Trivia >

James W. McCormack, Broker, REALTOR, e-PRO, RECS Help-U-Sell Edge Real Estate 1454 Bethlehem Pike North Wales, PA 19454 Office: 215-619-0100 ext. 111 Direct: 215-397-5102 jwm@jameswmccormack.com The James W. McCormack Home Selling Team James W. McCormack, Broker/Owner, Lead Listing Specialist and Mortgage Consultant Joseph Hradnansky, Buyer Specialist James Henshaw, Transaction Manager James W. McCormack Broker/Owner, REALTOR, e-PRO, RECS, Real Estate and Mortgage Consultant Your Personal Real Estate Expert Who Cares About You AND Guarantees it! James W. McCormack Broker/Owner of Help-U-Sell Edge Real Estate, is an experienced full-time real estate professional serving Bucks County PA and Montgomery County PA. Jim is a graduate of the University of Pennsylvania and Archbishop Ryan High School. He is a member of the Bucks County Association of Realtors, Pennsylvania Association of Realtors and the National Association of Realtors. Jim McCormack and Help-U-Sell Edge Real Estate are members of the Better Business Bureau. Jim received a sales award from Help-U-Sell in 2005. He looks forward to helping you buy and sell real estate in Bucks and Montgomery Counties. Jim and his wife, Dawn, lived in North Wales/Montgomery Township from 1999 through 2004. In January 2005 they moved to Quakertown. Please visit my websites for lots of great real estate related information: www.NorthPennHomes.com, www.BucksMontPA.com and www.JimTheRealEstateExpert.com. License Jurisdiction: Pennsylvania Brokerage Company License #: RB063564 Broker of Record: James W. McCormack Broker of Record License #: RM419403 Company Name: JWM Realty, LLC dba Help-U-Sell Edge Real Estate Address: 1454 Bethlehem Pike, North Wales, PA 19454 Office Phone: 215-619-0100 www.NorthPennHomes.com is brought to you by James W. McCormack NUMBER1EXPERT™ for North Penn School District real estate PA, Wissahickon School District real estate, Hatboro-Horsham School District real estate and Lansdale real estate, Pennsylvania Read James W. McCormack's Privacy Guarantee, Terms of Service, and Free & Without Obligation Pledge

NUMBER1EXPERT™
© Best Image Marketing and/or its clients.
All rights reserved. All information deemed reliable but not guaranteed.