Your first year tax savings is $9,015.45.

Deduct this from your annual housing costs, and you make out like a bandit!

Total interest paid in the first year would be $22,383.61. You also paid $3,600.50 for 1.00 discount point(s). With a combined state and federal tax rate of 34.70%*, you could save $9,015.45 in the first year. Your average tax savings over the 30-year loan term is $5,107.61 per year. Your effective interest rate after taxes is 4.082%.

Your APR is 6.459% for this loan. After taxes your APR is 4.218%.

Annual Percentage Rate (APR) is a standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. Likewise, a loan with a higher stated rate with very low fees could be an exceptional value. APR calculations incorporate these fees into a single rate. You can then compare loans with different fees, rates or different terms. While APR calculations may vary from lender to lender to a small degree, all lenders must follow the same basic rules.

Your effective income tax rate assumes that you are able deduct your state and local taxes from your Federal income taxes. This produces a lower effective tax rate than simply adding your Federal, state and local taxes together. The calculation we use is: State and local income tax rate X (1- Federal income tax rate) + Federal income tax rate. In your case this produces an effective tax rate of 34.70%.

Mortgage Summary

*Tax savings assumes that you qualify for a home interest deduction and that you itemize your taxes on schedule A of your Federal tax return. The maximum mortgage debt for which interest is deductible is limited to $1,000,000. Total tax savings may be less for higher incomes that have their allowable itemized deductions phased out. Your total tax savings may also be reduced if you prepay your loan.