Harry decides to finance his new home with a 30-year fixed mortgage. Because he figures he will

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Harry decides to finance his new home with a 30-year fixed mortgage. Because he figures he will be in this home for a long time, he decides to pay a fully deductible discount point on his mortgage to reduce the interest rate. Assuming Harry itemizes deductions and has a constant marginal tax rate over time, will the time required to recover the cost of the discount point be shorter or longer if Harry makes extra principal payments starting in the first year than it would be if he does not make any extra principal payments? Explain.

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McGraw-Hill's Taxation Of Individuals

ISBN: 9781259729027

2017 Edition

Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

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