I’m sure many of you have already felt the impact from the newest tax increases (expiration of the tax holiday) on your paycheck. To some it may be a lot and to others maybe you hardly noticed, either way it’s your money and I’m sure most of you would like to keep it!
Well, as much as we at Treadstone want to solve the problem for everyone, we can’t do much to reverse the tax increase. However, you might be spending some extra cash on a few things that just aren’t necessary! No, I’m not going to tell you to stop drinking your favorite latte from Starbucks, that’s your prerogative. I am going to tell you that now would be a perfect time to look into refinancing your mortgage! Rates today are whole percentage points (sometimes 1-5%)* less than they were just a few years ago and when your total mortgage is over $100,000,that’s A LOT of money even on a monthly basis (usually more in fact than the 2% hit we all saw in our paychecks).
Let’s do some math real quick (don’t worry we’ve already figured everything out, you just have to follow along). Let’s say your mortgage is currently at $150,000 with an interest rate sitting around 5% (on a 30 year loan with an Annual Percentage Rate/APR of 5.2% ). If you called Treadstone to refinance today, you might be able to get an interest rate around 3.5% (3.75% APR)*. A drop of 1.5% on a loan of that size might save you around $46,400 over the life of your loan. Divide that number by 30years in your loan and you are looking at a savings of around $1,500 per year! To take it even further, let’s assume that the majority of you get paid bi-weekly, therefore you’ll be getting roughly 24 paychecks in a year. To compare more directly what the average American might save by refinancing compared to the 2% per check you are losing, divide $1,500 by 24 and you get an extra $62 a check. It has been said that the average middle income individual lost around $38 a check due to the tax increase. So this means that if you refinance your house, you can potentially reclaim your money from the 2% tax holiday expiration and use it in whichever way you see fit, and then have a little left over for something fun!
Now, we know everyone is different and the above scenario is absolutely hypothetical and based on averages. However, you can call Treadstone today to talk to any of our professionals or visit our main site to see how we can help you refinance your home and recoup some of your hard earned money.
PS– if you haven’t yet purchased a home there is currently a $3,000 grant available to first time home buyers in Michigan. Taking advantage of this is also a great way to recoup that payroll tax holiday money.
*Above interest rates are an example of what some home-owners were able to secure in 2012. APR based on an estimated $4,550 of fees. Actual interest rates vary and are subject to underwriting requirements. Information and numbers regarding the 2% payroll tax can be found at http://blogs.wsj.com/economics/2013/01/01/payroll-tax-cut-expires-how-much-more-will-you-pay/ .