Real Estate News: How Does Your Mortgage Affect Your Finances

City of Hialeah - Miami Dade County

The fifth largest city in the State of Florida with an area of 20 sq. miles and a Class 1 Fire Department. Hialeah has access to most major thoroughfare - linked by I-95, I-75, the Palmetto and Sawgrass Expressways, and the Florida Turnpike. It is home to Hialeah Race Track and rich with investment opportunities for apts, homeownership, retail and the manufacturing sector. Mayor Julio Robaina serves as strong mayor. His vision to encourage business growth and quality of life for the residents maintains the City of Hialeah as one of the most desirable and stable community in Miami Dade County. See all the details at www.hialeahfl.gov

7/12/2010

How Does Your Mortgage Affect Your Finances

A debt that is unavoidable to many families is a mortgage. A common question is whether to pay it off as quickly as possible.

The answer depends on each person's financial situation. A mortgage can actually be a blessing to some. Mortgage interest is tax-deductible. The benefit is greater the higher the interest bracket and net worth.

Calcuate your mortgage's effective rate by subtracting your tax rate from 100 and multiplying that number by the interest rate. For example, a 28% tax bracket with a 6% mortgage would result in (.06 X 72) to equal the equivalent of a 4.32% mortgage rate after considering tax savings if itemized.

A situation that makes paying off a mortgage attractive is for someone at risk of bankruptcy. Many states offer protection from creditors seizing a home to pay debts.

Money taken out for a mortgage could reduce net worth later in life at time of retirement. While we can get a loan for a house, there are no loans to finance retirement.

So you need to plan your finances considering the stages of your life.