In Raleigh, North Carolina, as in the rest of the state, the allure of homeownership extends far beyond the emotional satisfaction of having a place to call your own. A critical yet often overlooked aspect of this investment is the potential tax savings. Yes, when considering a Raleigh mortgage, it’s not just the apparent rate you need to consider, but the actual cost after tax benefits. This is where Raleigh mortgage broker Logan Martini and the Martini Mortgage Group step in, providing invaluable insights into understanding the real cost of your mortgage, factoring in these tax advantages.

The Hidden Financial Perk in Your Raleigh Mortgage

A common misconception among many Raleigh homebuyers is that the cost of borrowing is directly tied to their mortgage rate. However, when tax deductions come into play, the scenario changes significantly. The IRS allows homeowners who itemize deductions to write off the interest on mortgages up to $750,000 (see IRS Publication 936, Home Mortgage Interest Deduction). This provision can substantially reduce your effective borrowing costs.

The Logan Martini 3-Step Process on How to Calculate the After-Tax Interest Rate on a Raleigh Mortgage

Homeowners who itemize tax deductions can deduct the interest on up to $750,000 of mortgage balances used to buy, build, or improve a qualified home. To calculate the after-tax cost of your mortgage there are 2 things you will need; what is your marginal tax bracket based on how you file (i.e, Single filer or Married, filing jointly), and what is your current mortgage rate for your home or projected Raleigh mortgage rate for your future property. 

Step One: Your Marginal Tax Bracket

The first step is to determine your marginal tax bracket based on how you file. A marginal tax rate is the rate that applies to the last dollar of your taxable income. In other words, the highest bracket homebuyer’s income falls into. At the time of publication, there are seven federal income tax brackets for 2024.  The top tax rate is 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly). Step one to calculate the after-tax interest rate is to determine your marginal tax bracket.

Step Two: Your Mortgage Rate

What is your mortgage rate?  Specifically, the note rate of your mortgage, not the Annual Percentage Rate (APR).  

Step Three: After-Tax Mortgage Rate

Step three has three steps and will require some very simple math to be performed:

• express your tax bracket as a decimal
• subtract the decimal from the whole number 1
• multiple that number by the note rate of your mortgage or projected mortgage rate

For illustration purposes ONLY, let’s assume you are in a 24% tax bracket and your Raleigh mortgage rate is 6.5%.

First step: Express the tax bracket as decimal … for this example, we are assuming a 24% marginal tax bracket so in a decimal form that is expressed as 0.24

Second step: Subtract the decimal from the whole number one … for this example, we would take one minus the marginal tax bracket expressed as a decimal hence, 1 – 0.24 = 0.76

Third step: Multiple that number by the actual mortgage rate … for this example, we are using a mortgage rate of 6.5% so 6.5 x 0.76 = 4.94 

In this example, a 6.5% mortgage costs ONLY 4.94% after-tax for someone in a 24% tax bracket.

TL;DR (Too Long; Didn’t Read) by Logan Martini

Understanding the after-tax cost of your mortgage in Raleigh is vital in realizing the full extent of homeownership’s financial benefits. Logan Martini’s expert guidance can help you navigate this often-overlooked aspect of mortgage planning. By following these simple steps, you can uncover the true cost of your mortgage and potentially save a significant amount of money.

Want Help or to Learn More?

Are you interested in exploring how you can benefit from the after-tax advantages of your mortgage? Contact Raleigh mortgage broker Logan Martini with the Martini Mortgage Group today. Let him guide you through the financial aspects of homeownership and help you maximize your investment.

Logan Martini

PLEASE NOTE: THIS ARTICLE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 936. Also, this article is not an offer or commitment to lend you money, and it is not an advertisement for a specific mortgage or a specific interest rate.

Exploring the Raleigh real estate market reveals a world of opportunities, particularly for homebuyers navigating the complexities of today’s national housing trends. While Raleigh’s market is part of a broader national picture, it stands out with its unique characteristics and prospects.

Nationally, the real estate market is a hive of activity. Recent statistics highlight that approximately 8 homes are sold every minute, every day across the country. This national trend provides a backdrop to the bustling Raleigh market, where the demand for homes continues to surge, driven by both local dynamics and broader economic factors.

Higher Raleigh Mortgage Rates & Home Values

The current landscape, characterized by higher mortgage rates and rising home prices, presents a dual challenge and opportunity. In Raleigh, these national trends translate into a competitive but rewarding market for those who navigate it with insight. The Martini Mortgage Group, a cornerstone in the Raleigh mortgage sector, is dedicated to guiding homebuyers through this intricate market.

As expert Raleigh mortgage brokers and lenders, we’re here to help you understand and leverage these trends for your homebuying success.

Raleigh Mortgage Broker Logan Martini

The National Association of Realtors recent forecast adds another layer of anticipation. With a projected 15% increase in existing home sales in 2024 and mortgage rates expected to stabilize between 6-7%, the national market, including Raleigh, is gearing up for heightened activity. This means the opportunity window for purchasing homes in Raleigh is widening, mirroring the national momentum.

At the Martini Mortgage Group, we understand that each homebuyer’s journey is unique, especially in a market influenced by national trends. Whether you’re a first-time buyer or looking to expand your real estate holdings in Raleigh, our team offers personalized advice and mortgage solutions. We’re committed to helping you find the best path to homeownership, keeping in mind both Raleigh’s local market nuances and the broader national context.

Raleigh Mortgage Broker Logan Martini

As Raleigh’s trusted mortgage lender and broker, the Martini Mortgage Group invites you to explore the vibrant Raleigh real estate landscape. With our expertise in Raleigh mortgage rates and market trends, we’re here to support your aspirations of homeownership. Let us help you turn the challenges of today’s market into your homebuying success story.

Martini Mortgage Group Bottom Line

This year alone, the market is poised to see about 3.96 million homes change hands. This translates to an impressive 10,849 homes per day, 452 homes every hour, and roughly 8 homes every minute. While the cost of entering the market might be higher, the flow of buyers and sellers remains uninterrupted, underscoring the need for trusted advisors in this sector.

Here’s the pivotal aspect – the increasing difficulty in buying or selling homes is not merely an obstacle; it’s an opportunity, especially for discerning buyers. It’s these challenges that open up unique avenues for building substantial wealth in real estate. We are currently in one of these critical moments, a time rich with possibilities for those who understand and navigate the market’s intricacies.

Embrace the opportunities in the Raleigh real estate market with the Martini Mortgage Group by your side. Reach out to us today, and let’s embark on a journey towards finding your perfect home in Raleigh, in sync with the promising national market trends.

Logan Martini

By Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini with the Martini Mortgage Group

In the heart of Wake County’s bustling real estate market, potential homebuyers might wonder if now is the right time to invest in property, especially with Raleigh mortgage rates higher than in previous years. I’m here to explain why securing a mortgage now could be a financially savvy move, particularly in the vibrant city of Raleigh.

Understanding the Raleigh Housing Market Dynamics

As of October 31, 2023, the inventory in Raleigh and across the 63 Wake County Zip Codes reflects a mere 2.4 months’ supply of single-family homes. This shortage stems from a decade-long underbuilding combined with a steadily climbing demand—a situation without a quick fix. While daunting, this challenge presents a unique opportunity for Raleigh homebuyers.

The Economic Advantage of Acting Now

The real estate forecast by Pulsenomics suggests an upbeat outlook, with an anticipated 6.4% increase in home values in 2024 and a 6.7% increase in 2025. Simultaneously, the Mortgage Bankers Association (MBA) predicts a dip in 30-year fixed mortgage rates to 6.1% by the end of 2024 and 5.5% by 2025. For Raleigh residents, these figures are not just numbers but a beacon for strategic investment.

A Raleigh Mortgage Case Study: Buying Today vs. Tomorrow

Imagine you’re eyeing a $400,000 home in Raleigh with a 7.5% mortgage rate. Opting for a 30-year fixed-rate mortgage at an 80% loan-to-value, your principal and interest (P&I) payment would be $2,237. Fast forward to November 2025, the same home’s value could climb to $454,115. If you delay your purchase, you could miss out on $54,115 of equity gain, plus you’ll need a heftier down payment due to the increased home value.

But there’s more. If you secured your Raleigh mortgage at today’s rates, not only would you have accumulated equity, but by refinancing at the forecasted lower rate, your monthly P&I could potentially reduce to $1,782—a significant monthly saving.

The Case for Buying in a Seller’s Market

Even in what’s technically a ‘seller’s market,’ a Raleigh homebuyer might have leverage. Currently, many homeowners possess mortgages with rates below 4%. When these homes hit the market, it often signals a motivated seller, which could be to your advantage.

Innovative Strategies for Favorable Raleigh Mortgage Rates

At Martini Mortgage Group, we’re committed to providing strategic solutions for homeownership. For instance, the 2/1 Buydown we offer could effectively give Raleigh homebuyers access to lower mortgage rates upfront, enhancing cash flow and equity building from the get-go.

The Martini Advantage: A Proactive Approach to Homebuying

Embrace the ‘Loan First, Home Next Strategy’ we champion at Martini Mortgage Group. By securing the best possible mortgage rate before you shop, you place yourself in an enviable position to negotiate and find your dream home in Raleigh.

Your Raleigh Mortgage and Homebuying Journey Starts Here

Whether you’re a first-time Raleigh homebuyer or seeking to navigate the Raleigh mortgage rates landscape, as a Raleigh Mortgage Broker, Kevin Martini, along with the Martini Mortgage Group, are here to guide you through every step.

The path to homeownership in Raleigh, even with higher mortgage rates, is paved with opportunities for savvy investors. Don’t wait—now might be the perfect moment to move into the Raleigh real estate market. Connect with us at Martini Mortgage Group today, and let’s explore how you can turn today’s challenges into tomorrow’s equity.