- 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 2006 the standard
deductions are $10,300 for married couples filing jointly, $5,150 for married
couples filing separately and singles, and $7,550 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.
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