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Let's
begin by establishing the facts: |
No. |
|
What
was your mortgage balance at the time of purchase? |
|
1 |
|
What
is your present mortgage balance? |
|
2 |
|
How
frequently do you make your mortage payments? |
|
3 |
|
What
is your mortgage payment? |
|
4 |
|
What
is your original mortgage amortization? (30 years or other) |
|
5 |
|
How
many years left to pay on your mortgage today? |
|
6 |
|
How
many years have you lived in your home? |
|
7 |
|
|
|
|
|
How
much is it going to cost all total? |
|
|
Mortgage
Payment * # of payments per year = Annual payment of: |
|
8 |
|
Annual
payment (#8):$ X Amortization years (#5) = Total P & I cost |
|
9 |
|
Subtract
your mortgage balance at purchase: (#9 minus #1) =
Your total mortgage interest costs |
|
10 |
|
|
|
|
How
Much is it Going to Cost Before Taxes? Or how much income must I
work for to pay off this debt? |
|
|
For
the answer to this question, divide your total principal &
interest payment (#9) by the reciprocal of your tax bracket. |
|
|
|
(35%
bracket divide by .65) (40% bracket divide by .60) (50% bracket
divide by .50) Average bracket is 35% |
|
11 |
|
NOTE:
The amount of money you must earn before taxes to pay off your
mortgage is: (#9 divided by #11) |
|
12 |
|
Additional
costs over & above your original mortgage principal borrowed =
(#12 minus #1) |
|
13 |
|
|
|
|
|
|
|
How
much have you already paid your bank since purchase, that you will
never get back? |
|
|
Annual
payment (#8) X (#7) years you have lived in your home = Total costs
to date: |
|
14 |
|
Principal
paid to date: (#1 minus #2) Original mortgage balance minus present
mortgage balance = |
|
15 |
|
Mortgage
interest: (#14 minus #15) = Mortgage interest paid to date: |
|
16 |
|
|
|
|
Total
cost (#14) divided by bracket reciprocal (#11) = Amount you've had
to earn to date: |
|
17 |
|
Subtract
Principal paid from the amt. you had to earn (#17 minus #15) =
current borrowing costs: |
|
18 |
|
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|
