Knowing the after-tax mortgage rate can help to determine whether prepaying the mortgage makes sense. Here is the formula.
After-tax mortgage rate = mortgage rate * ( 1 - federal income tax bracket )
To find your federal tax bracket, see this or this.
For example, the mortgage rate is 4%, the federal income tax bracket is 28%
the after-tax mortgage rate = 4% * ( 1 - 28% ) = 2.88%
The rate probably is lower, because you can also deduct the mortgage interest on your state income tax return.
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