After Tax Interest Rate
If my mortgage interest rate and car loan interest rate are the same, I know it is best to use my extra principle payments towards the car loan due to the tax advantage I have on the mortage interest. If there is a slight difference in their interest rates, how would I calculate the interest rate on the mortgage after taking into account my tax advantage? Knowing this would let me pick the next worst debt that I should look to pay off.
Filed Our Taxes
We filed our federal and state taxes yesterday night and they got accepted already. Whew!! What a relief!! I was always afraid that we would forget it and on the morning of 16 April, we would wake up with a shock. It’s not happening this year atleast. Between the federal tax where we would get a refund and the state tax we owe, the net refund would be less than $100. We owed money to the state because of my 2007 withholdings being incorrect. We fixed that this January. So we should be good for 2008 taxes. Since we bought the house only around the end of year 2007, our mortgage interest deductions were not as much as the standard deduction.
2008 would be the first year when both of us are working full-time. A couple of things that we need to remember for 2008 taxes are
1) 401k – 2008 would be the first year when we max out our 401k
2) Mortgage interest deductions
3) Traditional IRA contribution
4) Track our medical expenses more closely since we will mostly be itemizing our deductions
Bye Bye Year 2007.
Should We Refinance?
It’s out and loud that the fed lowered the fed funds rate by 3/4 point. I had a suggestion from a friend asking us to consider refinancing.
We have an 2 mortgage loans – one at 5.6% and the other at 7.25%. We intend to payoff the loan with the higher interest rate in the next 2 years. Given that bankrate.com quotes a 30 year fixed rate at 5.42%, 15 year fixed rate at 4.93% should we refinance?
What do you think?
