Rate-Improvement Mortgage

  

Categories: Mortgage

You had an adjustable mortgage. It was locked for your first two years, and then it floated as LIBOR plus 200 basis points. And in these last two years, LIBOR went from 3.5% down to 2%, so your 5.5% old 2-year locked mortgage (on its two-year anniversary, if you refinance it so that your rate improves) is now 4%, saving you 1.5% a year on the $300,000 you'd borrowed for the white-picket-fence-lined haunted house with the BDSM room downstairs.

That's a savings of 4,500 a year, every year, at least until you pay down the dough.

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Finance: What is a Mortgage?345 Views

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Finance allah shmoop shmoop What is a mortgage Well people

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a mortgage is just dead it's alone but one with

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special tax treatment For most people simply put Any interest

00:15

you pay on a mortgage to buy a home is

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tax deductible Morty morton's inputs down a hundred thousand bucks

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to buy a home that costs four hundred big ones

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his mortgages three hundred grand at five percent interest per

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year So that's fifteen thousand dollars a year he pays

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to rent the money from the bank which he uses

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to buy his dream home with the loop de loop

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waterslide Morty earns one hundred grand a year and pays

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tax on his last fifteen thousand of earnings soas faras

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The irs is concerned since morty can deduct his fifteen

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thousand dollars in interest against his earnings he does not

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in fact earn taxable wages of one hundred grand annually

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Instead he earns taxable wages of eighty five thousand dollars

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a year Essentially with government is doing is sharing in

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some of the cost of renting the money Taub i'm

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ortiz home well why would the u s government be

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so charitable Well because home ownership has been integral part

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of the american dream since the u s of a

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i po'ed in seventeen seventy six easy access to mortgages

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and then home buying can be a hugely beneficial asset

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In the vast majority of cases homes create family stability

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a store of wealth and tax dollars for local schools

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in the form of real estate taxes So don't feel

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bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello

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