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  • 08/18/2010
    -Mortgage Network Expands Across Mid-Atlantic Region Read More
  • 07/22/2010
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Loan Calculator - 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.

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 MARGINAL_TAX_RATE.

Mortgage Summary

Mortgage Information
Loan amountLOAN_AMOUNT
TermTERM years
Interest rateINTEREST_RATE
After tax rateTAX_ADJ_RATE
Monthly paymentMONTHLY_PI
First year interestFIRST_YEAR_INTEREST
First year tax savingsFIRST_YEAR_TAX_SAVINGS*

*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 feeORIGINATION_FEES_AMT
Paid for pointsDISCOUNT_POINTS_AMT
Other feesOTHER_FEES
Total closing costsTOTAL_CLOSING_COSTS

Payment Schedule
**REPEATING GROUP**

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We can not and do not 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.



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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 2007, the standard deductions are $10,700 for married couples filing jointly, $5,350 for married couples filing separately and singles, and $7,850 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. Use the table below to assist you in estimating your 2007 tax rate.
Filing Status and Income Tax Rates 2007
Tax rate Married filing jointly
or Qualified Widow(er)		 Single Head of household Married filing separately
10% $0 - 15,650 $0 - 7,825 $0 - $11,200 $0 - 7,825
15% $15,651- 63,700 $7,826- 31,850 $11,201- 42,650 $7,826- 31,850
25% $63,701- 128,500 $31,851- 77,100 $42,651- 110,100 $31,851- 64,250
28% $128,501- 195,850 $77,101- 160,850 $110,101- 178,350 $64,251- 97,925
33% $195,851- 349,700 $160,851- 349,700 $178,351- 349,700 $97,926- 174,850
35% over $349,700 over $349,700 over $349,700 over $174,850
Caution: Do not use these tax rate schedules to figure 2006 taxes. Use only to figure 2007 estimates.
Source: http://www.irs.gov/formspubs/article/0,,id=164272,00.html
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.

* Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We can not and do not 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.