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Interest Cost Calculator (9c)

Comparing Two Fixed-Rate Mortgages

Who This Calculator is For: Borrowers trying to decide which of two fixed-rate
mortgages they should select based on the lowest after-tax interest cost.

What This Calculator Does: This calculator displays the interest cost on two FRMs
taking account of all financing costs, before and after taxes,
over expected holding periods chosen by the user.

Information About Yourself
   Is This Loan for the Purchase of a Property or a Refinance?
  Expected Years in House, Cannot Exceed Term
  Property Value (e.g. 350000)
  Income Tax Bracket ( e.g. 27 )
  Loan Amount  (e.g. 100000)
Basic Loan Information Loan # 1 Loan # 2
  Interest Rate on Loan  (e.g. 7.50)
  Loan Term (in years)
  Points  (% of Loan) — Check box if charges will be added to loan
  All Other Fees Paid to Lender  — Check box if charges will be added to loan
Mortgage Insurance Information   (if applicable) Loan # 1 Loan # 2
  Type of Loan
  Upfront Mortgage Insurance Premium  ( $ ) — Check box if charges will be added to loan 
  Monthly Mortgage Insurance Payment  ( $ )
  Will Mortgage Insurance be Deductible for You? Yes      No  


This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. The period cannot exceed the shortest mortgage term. The period may be stated in fractions. For example, 25 years and 1 month would be entered as 25.083, 25 years and two months would be 25.167, and 25 years and 3 months would be 25.25, etc. Mortgage Insurance is now tax deductible if your income is $100,000 or less for a couple, $50,000 or less for a single person. Because points and other fees are paid upfront, longer holding periods reduce the interest cost of high-point/low-rate loans relative to low-point/high-rate loans. Down payment as a percent of sale price or property value, whichever is lower. Must be entered as a dollar amount. Can be entered as a positive or negative amount. If negative, any amount in excess of All Other Fees Paid to Lender will be retained by the loan provider. This affects the after-tax interest cost because on a purchase transaction points are fully deductible in the first year whereas on a refinance the deduction must be spread over the life of the loan, with the remaining portion of the deduction taken in the year the loan is paid in full. Enter as a dollars and cents amount. Conventional and FHA mortgage insurance terminates automatically when the loan balance reaches 78% of original property value. Conventional mortgage insurance premiums drop to .20% after 10 years. FHA mortgage insurance does not drop after 10 years.