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Client #1 - cc debt, 30 yr fixed, savings 28%
federal tax bracket plus a 4% state tax bill
Client #2 - mortgage had adjusted from 7% to 10.75%
$7,000 in cc debt 25% tax b
Client #3 - purchase rent vs buy taxes 28% bracket
Client #4 - interest only, pay off cc, side
acct 35% tax bracket
Client #5 - purchase 3 family investor
property
Client #6 - low rate option ARM 33 % tax
bracket
Client
#7 - credit good;
Client
#8 - credit challenged, buying a house
business owner
employed full time
self employed
with five children to support
they needed to improve their cash flow
Debt Structure When They Called Us
|
Source |
Amount |
Interest Rate |
Monthly
Payment |
Monthly
Savings |
1st yr
Savings |
|
Credit
Cards |
$42,000 |
20% |
$1,260(3%) |
N/A |
N/A |
|
Mortgage |
$280,000 |
6.5% |
$1,800 |
N/A |
N/A |
Debt Structure After Refinancing
|
Source |
Amount |
Interest Rate |
Monthly
Payment |
Monthly
Savings |
1st yr
Savings |
|
Credit
Cards |
$0 |
20% |
$0 |
$1,260 |
$15,120 |
|
Mortgage |
$329,000 |
5.5% |
$1,800 |
N/A |
N/A |
In the above example, first year interest on a
$30,000 credit card balance is $6,000. First
year interest on a $30,000 mortgage debt is
around $1,800. However, if you are in the 28%
tax bracket federal and 4% state tax bracket,
you can probably deduct the interest for the
mortgage payment off of your gross income,
giving you a tax savings of around $576.
Therefore your real interest expense on
the mortgage payment is $1800 – $576 = $1,224.
This is $4,776 less than the interest on the
credit card debt in the first year! The first
year after tax interest rate on the above
example is 4.147%. *
It's just
that simple.
* Date from the time
we receive all required documents.
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