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The Single-Family Home Tax Shelter Myth
- Thread starter Martin Gale
- Start date
Never seen or heard such a thing.I don't understand this thread. What's the argument here? If renting and owning is about the same, by all mean, owning it. Consider part of your "renting" money go back to your own pocket when you own a house. That is not include any duduction you might get from the interest payment. This is assumption the house is your primary resident.
The market is too hot now in most area, and it just doesn't make sense of buying now.
The market is too hot now in most area, and it just doesn't make sense of buying now.
There really isnt an argument. The OP put up a false statement "that people buy a single family home strictly as a tax shelter" and then proceeded to discredit the same. This is the classic definition of a strawman argument.Quote from thecalip:
I don't understand this thread. What's the argument here?
No one I know bought their home only because of the mortgage interest deduction...they bought their home to live in and the mortgage int deduction makes it a better deal then it otherwise would be...that is all.
It would have been better if the thread was titled, "comparison of the financial aspects of buying vs renting a home" since that is what it has boiled down to and I remain unconvinced that long-term renting vs owning of your primary residence (all else being equal, e.g. same property) is smart given the favorable tax treatment of mortgage interest.
Quote from winter:
There really isnt an argument. The OP put up a false statement "that people buy a single family home strictly as a tax shelter" and then proceeded to discredit the same. This is the classic definition of a strawman argument.
No one I know bought their home only because of the mortgage interest deduction...they bought their home to live in and the mortgage int deduction makes it a better deal then it otherwise would be...that is all.
It would have been better if the thread was titled, "comparison of the financial aspects of buying vs renting a home" since that is what it has boiled down to and I remain unconvinced that long-term renting vs owning of your primary residence (all else being equal, e.g. same property) is smart given the favorable tax treatment of mortgage interest.
As, the 'OP', I agree -- but "comparison of the financial aspects of buying vs renting a home" isn't a very arresting title.
Quote from OldTrader:
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
I never said the terms of a mortgage can be re-written. The terms are IN the mortage! Yes, check out some of the new interest only products and you will see them. I have friends in the sub prime lending business and there are many provisions in the loans that will require the borrower to make higher payments to compensate for any number of factors.
I'm glad you lived in orange county in 92. But you only proved my point. That you bought mortages from those that had their lives ruined and had to sell and were forced into bankruptcy. Good for you.
Quote from OldTrader:
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
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.
Quote from Maverick74:
I never said the terms of a mortgage can be re-written. The terms are IN the mortage! Yes, check out some of the new interest only products and you will see them. I have friends in the sub prime lending business and there are many provisions in the loans that will require the borrower to make higher payments to compensate for any number of factors.
I'm glad you lived in orange county in 92. But you only proved my point. That you bought mortages from those that had their lives ruined and had to sell and were forced into bankruptcy. Good for you.
All you have stated is the obvious... that inerest only loans can and do have their payments change. You have not produced any evidence that someone would have to put up more collateral when they are upside down on their loan.
Quote from fhl:
All you have stated is the obvious... that inerest only loans can and do have their payments change. You have not produced any evidence that someone would have to put up more collateral when they are upside down on their loan.
No, not because of higher rates. Look, I have a buddy that wrote a provision into a loan that he can call in the loan for any reason. Not just because of higher rates. Have you actually seen some of the contracts on some of these sub prime lending deals? You need to take a deeper look into some of the creative financing deals out there.
Previously you wrote:Quote from Maverick74:
No, not because of higher rates. Look, I have a buddy that wrote a provision into a loan that he can call in the loan for any reason. Not just because of higher rates. Have you actually seen some of the contracts on some of these sub prime lending deals? You need to take a deeper look into some of the creative financing deals out there.
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.Banks usually require a mortgage to stay above a certain equity line (loan to value ratio).