Because it shouldnâ€™t be any other way!
• ## How Low Are Mortgage Interest Rates?

Posted on April 22nd, 2013

I sat down with Ray Kay of Searchlight Financial today. He reminded me of how low rates are… and I don’t mean the average 3.5% rates. I’m talking about rates even closer to zero. This is how it works. You get an interest rate of 3.5% but you’re in a 40% combined federal and state tax bracket so you get the 40% tax deduction. This calculates out to: 3.5% X .6 = 2.1% after your deduction.
Essentially you are paying 2.1% on the money you have borrowed!

Here’s another important perspective that Ray points out: You buy a home for \$500,000 with 20% down and that home is worth \$750,000 in 10 years. (I think you will agree that this is pretty conservative.) What is your profit? Most people would say 50% because \$750,000 – \$500,000 = \$250,000 which is 50% of the original \$500,000 sales price. But this is wrong. You only put 20% of the \$500,000 down so let’s see:

Initial Capitial Investment = \$100,000 (20% of \$500,000)
Value of Home After 10 Years = \$750,000
Increase in Equity = \$250,000 (\$750,000 – \$500,000)
Profit on Your Original \$100,000 is \$250,000 or 250%