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The benefit of Mortgage Interest:
The
actual cost of the interest you end up paying may be considerably
less than you realize, because mortgage interest
is tax deductible. When you deduct mortgage interest, it reduces the
amount of income you are taxed on – and reflects
a noticeable lower after-tax interest rate. These charts will
help you estimate the after-tax interest rate
and effective monthly payment difference.
Tax
Chart for Married filing Jointly
Tax Chart for Single Filing
Single
Chicago Fed Study
Managing Your Home
Equity
I have a
great investment opportunity for you! Here are the
particulars
-
You determine how much want to invest each month, but
it must be at least the minimum required
deposit.
-
Your investment offers you zero percent rate of
return.
-
If you make less than the minimal required month deposit
you loss all your investment.
-
When the plan is fully funded there is no income paid out
to you.
-
Your tax liability increases with each month contribution
you make.
Sound
like a great investment? This is what millions of
Americans are doing each year.
If you
have 20% in equity in your home is it better to let that money
sit in your home as equity or put it into
some type of investment fund that will offer you
8% return on your money?
Let’s
compare.
Scenario #1 - Keep the equity in
your home
Assuming
a home value of 200K with an appreciation rate of 5% per year your
home value in 7 years will be $281,420.00 an
increase of $136,754.00 in equity
accumulation.
Scenario #2 – Extract the equity
from your home and invest in a side fund
If you
take the 40K in equity from your home and you put the it in to
a investment account that is earning a
conservatively 8% rate of return and you also contribute your tax
saving to this account which is approximately
$388.00 per month. After 7 years your home equity is now $84,429.00
(based on 5% appreciation per year) and your
side fund has grown to $113,397.00. So your combined total is $197,826.00 versus Scenario #1 which is
$136,754.00.
Conclusion; with scenario # 2 your net
worth is greater by $61,000.00 after 7 years.
After 10
years you will have the option of paying off your loan if you
choose.
Here is
how we arrive at these numbers:
Call
Mortgage Sources Corp today to Speak with your
Certified Mortgage
Planning Specialist
Mark Bustamonte
at (866)
840-2240
markb@mtgplanning.com
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