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Loser

Owning A Home Is Over Rated

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Let me tell you a little story about how I fell into the myth trap that owning a home is something that every American should do.

In 1994 I was lucky enough to fall into a really good job that paid excellent, had fantastic benefits and lots and lots of overtime.

From 1994 to 1995 I worked as much as I could, many times 7 days a week 12 to 14 hour days. In 1995 I started to think about buying a home. At that time the average home prices for a new home was around 70k compared to 35k only four years earlier. So I checked into the FTB advantages and discovered that they were all BULL CRAP!

In 1997 my credit was looking really good, I had over 20k in the bank, very high credit score and a solid good job. On December 24th I made the plunge. I bought, rather started, the process of buying my first home.

My first mistake was, I was a first time buy, and had no idea of how finance companies, like Accubank, utterly screw newbie homebuyers. (Watch out for AccuBank). They sucked up 6k in fees and what not for things that had nothing to do with my home purchase. They stuck me with a 5-year ARM with a starting interest rate of 5%. (Thankfully it never went higher than 7%)

At the time I was taking home about 45K a year. Why did I have to have an ARM when I could have had a fixed rate mortgage at 6%? Well simply put, they saw me coming.

It wasn't until after I closed that I discovered how horribly bad AccuBank had screwed me.

When buying the home the Mortgage is the easy part, it’s the money you know you have to spend each month to keep a roof over your head. In most cases an average mortgage, well at the time I bought my home, was around $900.00 a month. (Well within the affordable range)

About the time I bought my house the housing industry boom hit. My home, which was selling for 90k, shot up to 112k within a month. The county got into the action and assessed several thousands of dollars worth of bull crap school impact and environmental evaluation / impact fees onto the cost of new homes. (Fees that were utterly completely made up to get "Free Money" out of new home buyers.)

The monthly mortgage payment was one thing; I made that with no problems. It was all of the hidden costs that started to eat away at me.

You have to landscape your yard, put up a fence, put in a patio, buy blinds and drapes for the house, finish the garage, and fight with the home builder to get shoddy workmanship fixed within the first year of owning the home. (NOTE: Homebuilders WILL NOT fix anything unless you sue them... Be prepared to sue.)

Then you have all the county and state fees. The light pole fee, the wet land fee, the sewage drain clean up fee, the post office annex postal box fee, waste water discharge impact fee, etc. The list goes on and on.

Then every year we have to vote on a school levy or two, have this or that inspected, buy permits to expand the patio, pay fines for not having permits for building the fence or finishing the garage. The one that really chapped my hide was the fine for not having a permit to do landscaping. WTF!

And then there are the monthly costs of owning and living in a home. Your (overly inflated and highly inaccurate) Natural Gas bill, Power bill, water / sewer bill, phone bill, cable/satellite bill, garbage bill, Yard debris bill, and the old ADT bill.

To top those off, as they add about $400.00 to each month’s expenses, you have to contend with ever-higher property tax bills. Most are factored into your mortgage payment, which also has a nice hidden fee, the mortgage insurance bill. Factor in the homeowners insurance bill and all of a sudden your mortgage payment balloons to $1,200.00 a month.

Now your forking out over $1,600.00 a month in just house bills, add in the credit card bills, the car payments, auto insurance, and even the cost of food and your well over the $2,500.00 mark. Then our wise leader of the time, Bill Clinton, decides its in his *Cough* Americas best interest to open the flood gates of free trade and allow China to dump the market with cheap imitation products and virtually over night that fantastic job you had evaporates. No more OT, the fantastic benefits are gone, and you’re struggling to get buy on $1,800.00 a month. Now the savings start to hemorrhage cash, you sell one of the cars, go to debt counseling, refinance the house to pay crap off, and start to conserve on everything you can.

Then the electric company hikes its rates by 20% because people are using less electricity (They ask you to conserve, you do, then they punish you for doing it.) The same with the natural gas SOB's!

You drop all the extras like cable/satellite, cable ISP, ADT, and start holding garage sales to sell the stuff you just bought a year ago for pennies on the dollar.

Everything that you have spent the last five years accumulating has to go, what cannot go starts to break down and since your now strapped for cash, you cannot afford to fix it so it gets donated to charity.

In the mean time the bills begin to pile up.

In the end your little peace of the American Dream turns into cash guzzling money pit. Your 30-year roof starts to leak because the cheap arse contractors built your 30-year roof with five-year nails. The walls in the house need to be painted, the house needs to be painted, the garage door needs to be fixed, the fence needs to be replaced, the foundation is cracking, the screens on the house, thanks to Mr. kitty, need to be replaced. On and on and on and on and on it goes.

Finally your at the end of your rope, you think nothing else can go wrong and well much to your surprise, things get worse. You begin to develop medical problems. The medical bills begin to pile up. Do to your medical condition you are unable to work. Day after day after day your situation grows direr. Finally you’re out of savings, have no job, have a mountain of debt, and no one to help you. All those that you have helped over the last five or six years have abandoned you. The family members you let live with you for free because you felt sorry for them have turned on you like rabid dogs and are now going around bad mouthing you to your friends and family.

Your car is destroyed in an auto accident because some drunken, ex-employed, deadbeat SOB decides to run a red light and plow into you doing 60 mph.

When you come too, your served with summons over credit card bills, your home is being foreclosed upon, and you have no car, no savings, and no way in hell to pay for this medical bill that you just got saddled with because Mr. Dead Beat had no insurance and you dropped yours down to just liability the day before the accident to save money.

Do you think things could get worse? Well I hate to disappoint you, so I won't, they did.

While you were in the hospital one of your former roommates, most likely a family member, and breaks into your home and what they don't steal, they destroy. Your cut throat insurance company, most likely Farmers or State Farm, drag their feet and do everything in their power to disqualify your claim because of your credit situation. They won't say it, but you know what they are thinking.... "You did this yourself to collect on the insurance money." (Being as how you were in the hospital, in a comma at the time of the break in, it is highly unlikely that you had anything at all to do with robbing your own home.) Never the less they deny most of your claim sighting that you don't have receipts to prove that you claim is missing actually ever existed.

The only two options left to you are A, file for bankruptcy, and 2, sell the house to get out from under it.

Well you cannot go with option A because that would cost you $850.00 that you don't have so you go with Option B.

You contact a realtor and they come over and evaluate the home. You tell them about your situation and hope they can help. Well they can, they tell you that the home is worth $150k but since you owe $140k between the first and second mortgage, you'll have to sell the home short.

What does that mean? Well that means that your not going to see a dime from the sale of the home you just spent the last five years paying for. All that time and money you dumped into WAS FOR NOTHING!

Two months later the home sells for $121,000.00 and you walk away with the knowledge that US Bank, the second mortgage holder, got what they deserved for being such a fubar operation. (Another story in and of itself. NOTE: Do not do business with US Bank. You have been warned.)

A month later the realtor that bought your home for $121,000.00 turns around and sells it for $180,550.00. A tidy profit of nearly $60,000.00 dollars. Yup, they saw you coming.

SO ya, go buy that home, go live the American dream.

(This is based upon my life over the last seven years. And despite all that I posted here, I have only told you about 2/3rds of the crap that happened.)

Needless to say, buying a home was one of the worst financial choices of my life. I do wish all of you better luck but somehow I cannot help but feel that many of you will come to understand the real hidden truth about home ownership, its all way over rated.

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How sad! :cry: That's what my husband and I are working toward now -- homeownership. After hearing your story I was, at first, alarmed but I thank you for sharing your experience anway. What an eye-opener! :!: So many things to know about buying a home.

I still want my own home (after renting the home where we live for the past 9 years), but I want to be well aware of all the "hidden" and not so hidden costs involved.

Thanks again for sharing. I hope things get better for you. And the end of your account, I thought, "At least he/she wasn't foreclosed on."

Best wishes,

S.

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First mistake: Buying a home in a new subdivision. Lemme tell you something there hasn't been a decent quality home built since the Brady Bunch quit being first run TV.

Those builders bring in those illegal workers and they put up houses quicker than a Habitat weekend project.

Buy a home that's 20-25 years old, and have a couple home inspectors look it over.

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Sounds like things couldn't get much worse for you as far as home ownership. But now, you've got nowhere to go but up. :) I'll bet you learned a lot about that process.

I bought a home in 1999 and it was the best move I ever made. The house is in a very nice neighborhood but had hideous paint and carpet inside. I replaced all of that with new tile, paint and carpet. The place looks great! I also got a great deal on the house. Now I have almost 50% equity in it.

Grim is right about builder's shotty work. The shower in my master bath was tiled over sheetrock. That did not hold up and I had to go back in and redo it with the right kind of board. I am putting in cultured marble.

My loan is not the greatest but you live and learn. As soon as I get my cr cleaned up and finish my master bath, I am going to refi.

Good luck to you.

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Loser,

If most of that is true, I would suggest you contact Suze Orman via their web site as I think there is a possibility she would profile your case on CNBC. Suze Orman recently has been scouting for hardship cases regarding home ownership and particularly people with interest only loans. Why not give a try?

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It is not home ownership that is bad...

Anybody can get screwed and just because you "don't" own a house doesn't mean that you are immune from gettting the big chorizo.

No more so than owning a home.

And if you don't like high taxes, then you can live anywhere you want in this country. Some people love paying high taxes and they think that we don't get taxed enough. That is fine and they can live in those kinds of places.

But you can choose to live in places where you can fight back. In Texas, county tax assessors got a stiffy with rising property values. Many municipalities could claim that they did not raise taxes but just raised the value of your property instead.

The Texas legislature then passed a law that was basically like this. Okay you counties can raise the property values all you want but you can only "collect" a portion of that new value a year at a time. The counties still went hog wild but they couldn't collect the entire new assessments at one time.

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Well I really believe home ownership is good. I bought my house in 99 at the age of 24 and got a 6% interest rate. Couldn't really ask for better. But what I would suggest is to go interest only first. Mine is not interest only but when I buy my new house I am gonna refinance my home interest only because it will cut my monthly payments in half and the home that I currently reside in will be used as investment property.

See interest only is good for investment property and also property that you don't plan on living in for too long. Cause when you first buy a home for the first 5 to 10 years you really won't see anything going towards the principle, most will be going towards the interest. So if you get an interest only loan instead of paying tha $1000 mortgage you'll be paying like $400 or $500. These loans used to be hard to get but now they are making them easier. This way you can afford a nice home, and instead of going with an ARM, which fluctuates, you are at a set payment. Many people might say well you are never paying on the principle, but who cares if you don't plan on living in it for that long, and on top of it you'll get the money back in taxes. So you have a nice affordable home for cheap. But if you plan on buying and living in the dream home for a real long time, don't go interest only. But like me, I bought a townhome, got my degree and as my pay goes up, i'll refinance my townhome to interest only, rent it out and make a couple hundred dollars profit, and the money from the equity use it towards my new home. It can be good if you know how to work it.

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I agree thta for many situations, I/O loans are great. If you need to borrow 100%, and home values are going up, so that in a few years you can refinance into a lower LTV loan (LTV=Percentage of the value of your home that you are borrowing, 80% or less is best)

There is one small possible glitch to interest only. Be careful to find out how long the I/O period is for. ESPECIALLY if the loan is also an ARM. We all have plans that go out 5 years or so, but sometimes "things happen" and you may not be able to refinance out of the loan, or sell when you plan to.

NOTE: If you are considering an ARM. One option that most all "sub-prime" lenders have now is the 40 year payment plan. The payments are normally about the same as a 2 year ARM, but the rate is fixed over 40 years. You will want to refinance into a 30 year note at some point, but with the fixed payment, you don't Have to refinance or see your rate go up.

Charles

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Loser, I am sorry to hear what had happened w/ your homeownership story. That is a shame. I have to say that alot of your unfortunate circumstance seems come from things outside of actually owning the home. I wish you the best. Please be careful of Suzie, she kind of creeps me out.

Here's another spin on Charles take on I/Os. We recently purchased a home and I'd say we did close to 100 hours of research on mortgages. This included sit-down sessions with three different loan officers in the Philly area. In the end, it was a no-brainer for us to do a 5yr I/O. But I don't think its advantageous unless certain conditions exist. 1st, we purchased significantly less house than they pre-qualified us for. 2nd, we have no other debt- no car payments, no credit card debt, etc. 3rd (and this is key), we live a tightly budgeted lifestyle, and all of the free cash that is generated by going with an I/O gets invested and outpaces the reduction in principal that would have taken place in a 30yr fixed had we gone that route. 4th-Since we chose to buy a more modest house, as a safety net, if home prices were to retreat a bit we are in a position to make double mortgage payments to prevent being upside down.

I guess all of that mumbo jumbo boils down to if you are using an ARM to stretch into a home, be careful- your exposing yourself to risk IMO. But if you can plan & are disciplined enough to invest the "savings" you receive from the lower monthly I/O payment, you can build wealth faster.

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barrypii,

That's the most unkind and ungracious thing I've seen posted here in a long time. We all learn from our mistakes, and I hope the people in your life aren't as unforgiving as you are. I don't believe in kicking someone when they are down.

:roll:

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I am sorry, but it sounds like you did all of this to yourself...

I don't know how any of this were because of things he did himself.

you let yourself pay 6k in closing costs because you didn't shop around or look around.

My wife's "Best Friend" did the same thing to us. Twice. You would think that a friend of over 40 years maybe would not get you a great deal, but would not take advantage of people that don't know much. But she did. Once I got into this business and went to the two settlement statements, I was quite upset. Also, how do you know that he did not shop around, and at the last minute the lender came up with a bunch of junk fees. I have heard of lenders that at the last minute raised the interest rates and the borrower took the deal instead of loosing the property and deposits and etc.

You got stuck with PMI cause of the same reason.

You talk about PMI as being a stupid thing. That only dumb people paid. There are a lot of times where the net payment (the blended rate of the 1st and the 2nd) and the one with Mortgage Insurance is the same, the only differences being that a person with PMI has only one payment to make etc. There are some tax advantages with two loans, but sometimes not very much.

instead of using your job (any job that can be outsourced in the US will be outsourced, general rule of thumb) to go back to school, you decided to depend on the OT as income even though everything you read says you shouldn't count it as income in your budget.

I have never read that you can not count OT as income in real life. In the mortgage business if less than 2 years you can not count it, but if over 2 years even then. If mortgage people are willing to take a risk, then why can not a lay person.

you decided to buy a crappy built house, didn't you walk around it before closing or look at the houses they are building in the neighborhood?

I guess being a roofer yourself, you know to go up on the roof and check the nail quality, but I sure don't. I almost did a loan for a home that had a home inspector do an full inspection. Then 2 days before closing a friend of my client that is in the construction business came in from out of town. My client proudly shows him their "new home". He is looking in the basement, and things just look odd. Sure enough, big problem is discovered. Carl had hired a professional that did not catch it. Does that mean that he intentionally was going to buy a 'Crappy house'?

You did all of this to yourself, and You sold your house for 121k instead of going downtown to a place that allows you file bankruptcy or ch13 on your own for a whopping 50-100 bucks, which would have allowed you to save your house and car and pretty much get rid of everything else (My friend did this when he lost his 70k a year job and took one making 30k).

Interesting your comment about BK. I know that for many people it is the way out of some bad situations that don't seem like they can go away. I went through about the same as this poster, and had several people suggest that I go BK, but I just could not. Probably not a smart thing, but just got out myself. Also, I "Played lawyer" myself one time and saved a ton of money on a contract. Lost a lot from a suit where the other guy had paid a lawyer. Maybe your friend should have just toughed it out?

Go to school, join the army, navy, AF, or marines and get a life.

How do you know that he does not "have a life"?

It was unpleasant reading this person's first post, but it probably was an eye opener for some. I have had people complain that not only was there not a "Break" for first time home buyers, but sometimes FTHB's pay a penalty. That is because it is much different owning a home than renting.

Thankfully we all work through our first home ownership, and get adjusted to it, and realize that it is quite wonderful to own a home. I have talked with so many 3-6-12 months after they got their home that are delighted. None that say that they wish that they were still renting.

Sorry you were in a wreck, that is horrible... I hope you are feeling better now and can actually goto work.

WOW. Maybe this poster was in a wreck, and has a bit of sympathy...

Good luck... i hope you learn from this and move on with your life, I hope that you don't repeat the cycle above...

Most everyone that I have ever talked with that has gone throught the things this person has, is very much wiser for it, and never repeats the cycle.

I will probably erase the above soon, but it just makes me upset that people are sometimes do quick to judge. "Walking a mile in others shoes" is a great help.

Charles

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I was driving home last night, and I got upset at myself for writing this.

I came from the poorest family you could imagine, was on welfare growing up and I lived in a junkyard that my family "owned"...

I forced my self out of that lifestyle, but I still go home and see friends doing the same things visiting the check cashing places on a weekly basis and it pisses me off that they decided to live their life always being broke, and putting their kids in the most ragged clothes you can imagine, yet they are smoking marlboro's at 5 bucks a pack, watching the superbowl on their $3,000 TV and drinking cases of bud while their kids barely have lunch money for milk.

I killed myself to escape from that, and that sometimes makes me a little too quick to judge.

I feel horrible that I took this frustration of mine out on someone I don't know and for what I wrote, and I am extremly sorry.

I really do hope this poster goes on to do great things, and takes all this as a lesson learned.

I just reread the original post and realized how wrong my post really was. This could happen to anyone. Again, I am sorry.

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but I still go home and see friends doing the same things visiting the check cashing places on a weekly basis and it pisses me off that they decided to live their life always being broke, and putting their kids in the most ragged clothes you can imagine, yet they are smoking marlboro's at 5 bucks a pack, watching the superbowl on their $3,000 TV and drinking cases of bud while their kids barely have lunch money for milk.

Not to follow in the "glass houses and stones" but you're right. It's amazing how often poverty is often the effect of various "vices" - smoking, alcohol consumption, even gambling.

Marlboro's aren't $5 per pack, maybe in NY - midwest seems to be about $3.50/pack. And the $3000 TV - likely came from a RTO place. And you wonder how many of these folks take their paycheck, go the the check cashing, then see their bookie, or go to a bar and break out the poker chips and play poker all night.

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I was driving home last night, and I got upset at myself for writing this.

I came from the poorest family you could imagine, was on welfare growing up and I lived in a junkyard that my family "owned"...

I forced my self out of that lifestyle, but I still go home and see friends doing the same things visiting the check cashing places on a weekly basis and it pisses me off that they decided to live their life always being broke, and putting their kids in the most ragged clothes you can imagine, yet they are smoking marlboro's at 5 bucks a pack, watching the superbowl on their $3,000 TV and drinking cases of bud while their kids barely have lunch money for milk.

I killed myself to escape from that, and that sometimes makes me a little too quick to judge.

I feel horrible that I took this frustration of mine out on someone I don't know and for what I wrote, and I am extremly sorry.

I really do hope this poster goes on to do great things, and takes all this as a lesson learned.

I just reread the original post and realized how wrong my post really was. This could happen to anyone. Again, I am sorry.

Thanks for apologizing - everyone makes mistakes! Long live and prosper!! :)

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I thought barrypii 1st post was a bit harsh....a little compassion goes a long way. I think Loser acknowledged that things were not handled properly. Sometimes life kicks you in the a$$ and you feel like its piling on. If I had a $1 for every decision I could have made better, I wouldn't have to work. The important thing is to dig deep, study it, learn everthing you can, and move on.

If you are actually still reading this thread, what is your situation now?

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If I had a $1 for every decision I could have made better, I wouldn't have to work.

I would have my own tropical island with a mansion on it with maids wearing those French maid outfits; I'd be wearing the slickest threads, be driving that covertible I always wanted; etc...

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What a whacky thread!!!!!!!!! :shock:

Sorry to hear/read your misfortunes! Homeownership does have pitfalls for some. I hope it works out for you though!

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Then you have all the county and state fees. The light pole fee, the wet land fee, the sewage drain clean up fee, the post office annex postal box fee, waste water discharge impact fee, etc. The list goes on and on.

Then every year we have to vote on a school levy or two, have this or that inspected, buy permits to expand the patio, pay fines for not having permits for building the fence or finishing the garage. The one that really chapped my hide was the fine for not having a permit to do landscaping. WTF!

Holy hell, where do you live? Most areas are not quite that nazi about things. We pay state and county taxes, and that's it. We put siding on the garage, built a deck, and added onto the fence and no one bothered us about permits. No inspections, etc. (I think they're only required if you build it in proximity to the property line around here) These are the kinds of stupid little things you need to check into before deciding where to buy a home.

I'd still rather deal with paying a mortgage + utils & taxes, than paying rent + utils. I just look at "fixing up" costs as an investment into my property value.

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Normally I take expletives out, but in this case am going to leave it in.

I know that there are difficult places to live because of fees, but this poster ended up in the very worst.

The main pro for owning a home is that people think better of themselves, take better care of their surroundings etc, when they own a home. That is why I am sure that if and when the US tax code is changed, it will always include the governments "helping" with the cost, by having mortgage interest deductible. They took it away for all of the other interest paid, but will always keep this one. Well, always is a long time...

Charles

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Not to hijack the thread but the mortgage interest deduction isn't a sure thing. You seen what is being recommended by some presidential commission on tax reform?

One of the key points is reducing or eliminating the mortgage deduction, under the guise that the rich over-buy homes and put their personal debt within the equity of the home [thru HELOC's I would assume] in order to deduct what would be non-deductible debt.

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I know, I can't believe they are even THINKING of taking away the mortgage deduction. I read today by some real estate economist that that could send housing prices way down.

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If home mortgage deduction goes away then I would be only in favor of the Steve Forbes flat tax. Set it at 10% for everyone.

If they still want to carry out their feelgood social engineering scheme make only income over the set individual poverty level taxable and tax that somewhere between 15 and 20%.

Do away with "joint" returns. Each person be responsible for their own income tax. To appease the Left this will not involve taxation into defining alternative lifestyle relationships. If two men or two women, a threesome, or polygamist Mormons want to be together, fine. It doesn't matter for taxes.

Again - apologies for hijacking the thread. If moderator or admins want to move this post to another more appropriate thread please do so.

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The guy is right homeownership is overated!!! The book 'Rich dad poor Poor dad" gets it right homeownership is not an investment. Most Americans cant afford their new homes and will get a wake up call when their hybrid mortgages collapse. In addition, Bush is thinking of reducing the mortgage rate reduction soon to pay for the bloated fiscal budget. Anyway , guy your lucky a house for under a 100k. Try living on the East Coast !!!!!

Thanx

Playmaker

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I know, I can't believe they are even THINKING of taking away the mortgage deduction. I read today by some real estate economist that that could send housing prices way down.

If that were to happen, the affordability of a home would have to be recalibrated NOT to include the tax deduction. With people carrying mortgages eating up 60% of their gross income in some markets just to get in the door, that would be a major punch in the wallet. It would set in motion the dominoes that would unwind prices in many markets.

However, this would never happen. Too many interested and controlling parties rely on the deduction (constituents, builders, lawmakers, even local governments who rely on tax incomes set by millage, etc.). And the federal gov't has a vested interest in promoting home ownership as a public policy. Any serious tax reform bill that includes elimination of mortgage deductions would be DOA, so no reason to sweat!

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