The Single-Family Home Tax Shelter Myth

[Maverick74]

Quote from winter:

Previously you wrote: To me, "usually" requires more than a few special cases; at the very least I think you stretched the truth to make your point when you wrote that.

Yes, usually they do. It's written into the loan provisions. I never stated on this thread that the bank or lender can do something not is not on the loan contract. The problem with many of you on this thread is you are years behind what is actually going on out there. Do you guys actually look at whose buying these homes. It's not traders from Goldman Sachs. It's Suzie who works at Walmart with a 580 credit score and no savings. She is going to a sub prime lender and she is getting that nice little home she always wanted, at a price.

Hedge funds are not getting into creative lending on real estate. Wait till you see their terms. So no, it's not a few cases, it's a large number of loans.

 

[winter]

Quote from Maverick74:

Yes, usually they do. It's written into the loan provisions. I never stated on this thread that the bank or lender can do something not is not on the loan contract. The problem with many of you on this thread is you are years behind what is actually going on out there. Do you guys actually look at whose buying these homes. It's not traders from Goldman Sachs. It's Suzie who works at Walmart with a 580 credit score and no savings. She is going to a sub prime lender and she is getting that nice little home she always wanted, at a price.

The vast majority of mortgages written are not from subprime lenders. A quick google gave me figures from a couple years ago that said 10% of all mortgages are subprime.

In order for your "usually" statement to be true it would have to apply to prime lenders as well.

 

[OldTrader]

Quote from Maverick74:

Many borrowers pay zero PMI. If you put up at least 20% downpayment by law you are not required to pay PMI. Also, it's possible if you are paying PMI to remove it once you have sufficient equity in your home. Another erronous post by oldtrader.

Let me quote from my post:

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.

Now let me go through an explanation for those of you who are incapable of reading the English language. If the mortgage EXCEEDS 80% LTV, that means the borrower put less than 20% down. Therefore, PMI would be required. On the other hand, if the mortgage is LESS THAN 80% LTV, that would mean the borrower had MORE THAN 20% down, and would not need PMI.

What's your first language Maverick?

OldTrader

 

[Maverick74]

Quote from OldTrader:

Let me quote from my post:



Now let me go through an explanation for those of you who are incapable of reading the English language. If the mortgage EXCEEDS 80% LTV, that means the borrower put less than 20% down. Therefore, PMI would be required. On the other hand, if the mortgage is LESS THAN 80% LTV, that would mean the borrower had MORE THAN 20% down, and would not need PMI.

What's your first language Maverick?

OldTrader

Hey old guy, are you deaf or just stupid? My comment was perfectly clear pertaining to PMI. Not all homeowners pay PMI!!!!!!!!!!!

In fact, even loans with less then 20% equity don't pay PMI if they are VA loans. Of course you already knew that right?

I made it as clear as I could that if you have more then 20% equity, you do not pay PMI. You stated everyone pays PMI! Oy vey. Go sell your "how to buy real estate with no money down" course somewhere else. We're all stocked up here.

I notice how you totally gave up on your original fight about what a great deal it was to be a homeowner over renting. LOL. All it took was a few numbers to shut you up eh? I'll keep that in mind in the future.

 

[OldTrader]

Quote from Maverick74:

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.

Here's your original quote. Note the "banks usually require...". Now, when you say "banks", I take this to mean the nationwide banks and mortgage companies like Citigroup, Countrywide (who I believe is the largest mortgage lender in the country), etc etc. I don't take this to mean some rinky dink little bank somewhere.

That said, I am on safe ground to say that the VAST MAJORITY of mortgage loans originated by nationwide and large lenders do not contain a clause of the type that you mention. Period. Your statement is false.

There are loans that are "negative amortization" types of loans, where the borrower makes a payment less than what is necessary, with the difference being added monthly to the mortgage balance. This type of mortgage over time could conceivably grow to well over 110% of value, at which point the mortgage lender could fully amortize the loan. But not foreclose.

Stop and think about the logistical nightmare these lenders would have to actually implement your ridiculous idea. They would have to conduct an appraisal on every house that they though "might" have dropped in value enough that the mortgage would be over 100% of value. Pleeze! Ain't gonna happen with ANY of the nationwide lenders. As long as they are receiving their payment they are happy campers. And if they are not receiving the payment it makes no difference to them what the value of the property is, they foreclose.

Interesting enough, there are numerous programs around which are 100% loans...starting with VA loans, and then going right down the list to conventional and subprime type programs. Even the FHA loans are nearly 100% loans, and permit the gifting of the downpayment. Doesn't seem to worrying ANY of the nationwide lenders who make these types of loans.

Now, is there any lender anywhere who has a mortgage of the type you claim? I called my favorite mortgage broker here in town to ask if there is anyone, anyplace that can call a loan if the value of the property drops. The answer? NOPE! He deals by the way with several hundred different mortgage lenders.

Now, there are loans that have a balloon clause...meaning the loan is due and payable in a shorter term, perhaps 5, 7, or 15 years for instance. If the borrower needed to refi at that time, and his property had dropped in value, he might now be able to refi the entire amount. But that's a completely different example than what you are citing.

Perhaps what you should do is provide a link that describes your program.

OldTrader

 

[OldTrader]

Quote from Maverick74:

Hey old guy, are you deaf or just stupid? My comment was perfectly clear pertaining to PMI. Not all homeowners pay PMI!!!!!!!!!!!

In fact, even loans with less then 20% equity don't pay PMI if they are VA loans. Of course you already knew that right?

I made it as clear as I could that if you have more then 20% equity, you do not pay PMI. You stated everyone pays PMI! Oy vey. Go sell your "how to buy real estate with no money down" course somewhere else. We're all stocked up here.

I notice how you totally gave up on your original fight about what a great deal it was to be a homeowner over renting. LOL. All it took was a few numbers to shut you up eh? I'll keep that in mind in the future.

Again, here is my statement concerning PMI

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.

Now where in that statement do you get "everyone pays PMI"? Sheesh. You definitely cannot read. Please re-read this quote several times before you make any further comments you idiot.

VA loans don't have PMI. They do have a "VA Funding Fee", which is similar. Guess you already knew that huh?

Finally, it wasn't worth it to me to further discuss you arguments regarding renting. I found them stupid and moronic. I got a good laugh out of the picture of all these renters with $500K...obviously you don't know much about the rental business.

Again, my advice to you is to learn something about real estate before you make a further fool of yourself.

OldTrader

 

[Maverick74]

Quote from OldTrader:

Again, here is my statement concerning PMI



Now where in that statement do you get "everyone pays PMI"? Sheesh. You definitely cannot read. Please re-read this quote several times before you make any further comments you idiot.

VA loans don't have PMI. They do have a "VA Funding Fee", which is similar. Guess you already knew that huh?

Finally, it wasn't worth it to me to further discuss you arguments regarding renting. I found them stupid and moronic. I got a good laugh out of the picture of all these renters with $500K...obviously you don't know much about the rental business.

Again, my advice to you is to learn something about real estate before you make a further fool of yourself.

OldTrader

Oh gee, you really won me over with all your anecdotal evidence. LOL. No idiot, those people with 500k probably have investment property. You know, people can be renters and have investment property. Funny how you can't put together any numbers to back up your argument. I'm suppose to take you at your word that buying property right now in this overheated market is a bargain to renting. LOL. OK Goldilocks, whatever you say. Thanks for making it so clear with all your precise math and number crunching. Wait, hold on, Carlton Sheets just called, he wants to know if you will be attending his seminar this weekend? Hahahahahaha.

 

[Martin Gale]

Maverick, OldTrader,

Please continue your pissing contest in PMs. If there are no more constructive contributions, I'll close the thread.

 

[Tigerjaw]

Business Week did a study of the housing market throughout the country in 2005 "How Strong is the Housing Market Where You Live?" and in some areas (especially on the two coasts) it could cost as little as one third of the total cost of ownership to rent instead. In particularly 'hot' housing markets this was very evident.

 

[snooptrader]

Quote from Martin Gale:

Maverick, OldTrader,

Please continue your pissing contest in PMs. If there are no more constructive contributions, I'll close the thread.

Is Maverick that same guy that shills for Quadriga?