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It's my understanding that only the interest you pay on a mortgage is tax deductable. Wouldnt you also be getting more of a tax deduction with a 30 year mortage? Was I mis-informed on that?
@Not_the_Point wrote:It's my understanding that only the interest you pay on a mortgage is tax deductable. Wouldnt you also be getting more of a tax deduction with a 30 year mortage? Was I mis-informed on that?
Don't fall into the trap of thinking that paying more interest is to your benefit because of the tax deductibility of it. Yes, you get more of a tax deduction, but at a very expensive price. The total interest payments on a $200,000, 30 year loan at 6.25% is $243,316. The corresponding interest on a 6.00%, 15 year loan is $103,788. Assuming your marginal tax bracket is 25% that means you get 25% back and you lose 75% of every months interest charge. Poof, down the drain, never to be recovered. Completely dead money given to your mortgage company. That's a waste of money, imo. That means over the life of the loan your added cost is ($243k - $104k) x 75% = $106k. (not taking into account the time value of money). I don't like to throw that kind of money around.
Never pay interest just to get a tax deduction. That's faulty thinking. It's a selling point of the real estate industry, but it is NOT to the buyers advantage.