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jrodkins
Jan 1, 2013, 11:18 PM
The example states:
"What are the after tax mortgage payments on a $200,000, 30 year fixed rate mortgage that has an annual fixed interest rate of 5%? Payments are made monthly."

The question is:
There is a problem with this exam problem. What is it?

Am I right in saying that in order to find the after-tax mortgage payments, we need the tax % or brackets - which this example does not provide?

ArcSine
Jan 2, 2013, 08:54 AM
That'd be my guess.

While a simple amortization schedule could tell you the principle / interest composition of each payment, one would also need to know the payer's marginal tax rate in order to figure the after-tax net amount of each monthly payment, as this would vary from individual to individual.