There’s a lot of talk in the news about how low rates are right now. Experts are calling it “cheap money” and many people in longer 30-year mortgages are finding they can afford shorter 15-year ones, effectively saving them thousands in interest. But what does it mean for you?
Tax Deductions Will Change
What does it mean when you have a lower interest rate? If you want a bigger, newer house, that may be a possibility. If you live in a home you love and simply want to re-fi, you may find that your tax deductions are lower.
Keeping it simple, you get a deduction for the interest you pay on your home mortgage each month. A homeowner with a $300,000 mortgage at 4.375% would have paid about $14,000 in interest in 2015. If that homeowner had an income of $100,000, she would have only had to pay taxes on $86,000.
More Money in Your Pocket
When you pay $5,000 less in interest on your new home, you get a smaller deduction, but you know what else you get? More money.
By not paying the bank $5,000, that’s money you could take a cruise with, pay off debt, or pay toward your child’s (or your own) education. If you’re looking for a home, whether it’s in Menifee, CA, or a surrounding area, there are many opportunities, but rates have gotten as low as they can get, and the time to strike is now.