You haven't talked to anyone that bought a house in Orange County in 1992. They had their life savings wiped out overnight.
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The Single-Family Home Tax Shelter Myth
- Thread starter Martin Gale
- Start date
You haven't talked to anyone that bought a house in Orange County in 1992. They had their life savings wiped out overnight.
AMT nukes most property tax deductions.
AMT does not effect mortgage interest deductions.
Best thing that ever happened to me was missing the housing boom of the 1985. I was continuously trying to save the 5% down needed for the down payment on a town house in NYC suburbs ... but, the market prices were appreciating faster than I could save. So frustrated, all I could do was just rent.
In 1991, my "best man" bought the 385k unit I was looking at in 1988 for 180k. (sold it in 1999 for 285k). Ironically, in 1991, many banks in USA went under because of the Real Estate bubble (including my bank City Federal Savings). The Federal Government had to create a Real Estate Banking Corporation to collect all the insolvent loans from investment in Condos/Townhouses. And lending terms at that time were 20% down minimum (instead of 5%). Boy, that hits prices hard (forshadowing?).
Also, ironically, in 1985, I was stairing at a 10.5% 30 year mortgage, but in 1991 he got 7.25%?
Perspective is tough to maintain. Even Warren Buffett waffled and apologized for not owning "tech stocks" in 1999.
AMT does not effect mortgage interest deductions.
Best thing that ever happened to me was missing the housing boom of the 1985. I was continuously trying to save the 5% down needed for the down payment on a town house in NYC suburbs ... but, the market prices were appreciating faster than I could save. So frustrated, all I could do was just rent.
In 1991, my "best man" bought the 385k unit I was looking at in 1988 for 180k. (sold it in 1999 for 285k). Ironically, in 1991, many banks in USA went under because of the Real Estate bubble (including my bank City Federal Savings). The Federal Government had to create a Real Estate Banking Corporation to collect all the insolvent loans from investment in Condos/Townhouses. And lending terms at that time were 20% down minimum (instead of 5%). Boy, that hits prices hard (forshadowing?).
Also, ironically, in 1985, I was stairing at a 10.5% 30 year mortgage, but in 1991 he got 7.25%?
Perspective is tough to maintain. Even Warren Buffett waffled and apologized for not owning "tech stocks" in 1999.
Quote from mschey:
That's someone who didn't pay their mortgage payment....had they paid it.....they would be doing fine today. How many people did that happen to?
Are you serious? Dude, Orange County went bankrupt in 1992. Over 500k people lost everything. We are not talking about 10 poor people. We are talking about half a million people. You don't understand. When their property values dropped, they went upside down on their mortgage. That meant they owed more for their home then it was worth. Banks usually require a mortgage to stay above a certain equity line (loan to value ratio). In other words, your loan value cannot exceed usually 100% or 90% of the value of the home. If it does, you are then required to pay up and get the ratio back in line. If you can't, you are forced into foreclosure.
Property tax (1%): 2,325$/yr x 30 years = $69,750
1 % i wish, try 3% in my town.
1 % i wish, try 3% in my town.
Quote from Maverick74:
Are you serious? Dude, Orange County went bankrupt in 1992. Over 500k people lost everything. We are not talking about 10 poor people. We are talking about half a million people. You don't understand. When their property values dropped, they went upside down on their mortgage. That meant they owed more for their home then it was worth. Banks usually require a mortgage to stay above a certain equity line (loan to value ratio). In other words, your loan value cannot exceed usually 100% or 90% of the value of the home. If it does, you are then required to pay up and get the ratio back in line. If you can't, you are forced into foreclosure.
WTF are you talking about. I have NEVER heard of a margin call on realestate. I just looked over my papers and there is nothing in the loan agreement that states I have to maintain any LTV ratio. Further, PMI insurance covers most of those instances(where the borrower puts up less than 20% down)....but in all cases the borrower must default.
Quote from Maverick74:
Are you serious? Dude, Orange County went bankrupt in 1992. Over 500k people lost everything. We are not talking about 10 poor people. We are talking about half a million people. You don't understand. When their property values dropped, they went upside down on their mortgage. That meant they owed more for their home then it was worth. Banks usually require a mortgage to stay above a certain equity line (loan to value ratio). In other words, your loan value cannot exceed usually 100% or 90% of the value of the home. If it does, you are then required to pay up and get the ratio back in line. If you can't, you are forced into foreclosure.
Completely incorrect. The terms of an existing mortgage cannot be rewritten, regardless of what the underlying security does or does not do. You are NEVER required to "pay up and get the ratio back in line" on an existing mortgage.
By the way, I lived in Orange County in 1992. I bought several houses there that year, and surprise, I did not go bankrupt. That year was a great year to buy some upside down real estate. Wish I had bought more.
Sounds like you need to study up on real estate my friend.
OldTrader
Quote from mschey:
WTF are you talking about. I have NEVER heard of a margin call on realestate. I just looked over my papers and there is nothing in the loan agreement that states I have to maintain any LTV ratio. Further, PMI insurance covers most of those instances(where the borrower puts up less than 20% down)....but in all cases the borrower must default.
You're right. No loan is ever called as long as you make timely payments. Loans can only be foreclosed in accordance with laws in the state where it is located.
PMI is the insurance a lender has (paid for by the borrower) insuring that portion of the mortgage that exceeds 80% LTV. In connection with Mavericks erroneous remarks it really doesn't come into play.
OldTrader