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The interest deduction is only for "rich" people. Don't you think it is weird that the cost of buying the same house is less for a wealthy person than a poor one?
WRONG
THE MORTGAGE INTEREST DEDUCTION PHASE OUT
Back in 2011, if you have an adjusted gross income of over $166,800, your mortgage interest starts to get phased out. For every $100 of income over $166,800 you lose $3 of itemized deduction X 33.3% up to a maximum loss of 80 percent of your itemized deductions. Talk about another overly complicated rule the IRS/government has implemented.
Example: You make $266,800 and you have $50,000 in mortgage interest deductions. Take $266,800 – $166,800 = $100,000. Then take $100,000 X 3% = $3,000. Finally, take $3,000 X 33.3% = $999. You can now only deduct $49,001 ($50,000 – $999) from your income instead of originally $50,000.
Stating a "line needs to be drawn somewhere" is not a reason, let alone a reason based on a a risk analysis or some other financial analysis.
My opinion is the amount of down payment that should be requested depends on several factors, like who is getting the loan, location of the home, historic market prices for the home/area, etc.
You want to buy a house that is $100k and want to borrow the money from me. I am only willing to lend 80% of the value because house value's go up and down. There is also wear and tear issues that could develop. If you don't have the initiative or ability to save $20k - 20% and have no money on the table, why should I take a risk with you?
Don't forget, you are "asking" them to lend you money, they are NOT obligated to give it to you unless you can prove you have the ability to pay it back. Being able to pay 20% says a lot about you and how they view you as a risk.
Originally Posted by boxus View Post
No one still has addressed; why 20%?
Stating a "line needs to be drawn somewhere" is not a reason, let alone a reason based on a a risk analysis or some other financial analysis.
My opinion is the amount of down payment that should be requested depends on several factors, like who is getting the loan, location of the home, historic market prices for the home/area, etc.
It's their money and you're opinion does not matter. Once again, people need to understand that companies are NOT social institutions. Lending money to you is an investment like it or not.
After the crash my mortgage company wanted 20% down PLUS at least 6 months of payments in the bank plus wanted all the following financial statements...
BALANCE SHEET
A record of all ASSET
Record of debt owed - LIABILITIES
(Asset minus liabilities) = NET WORTH.
INCOME STATEMENT
3 years of tax returns (ability to pay bills) - INCOME
Monthly EXPENSES Income to debt ratio - CASH FLOW
PLUS an excellent credit report - PAYMENT HISTORY
When you invest you want to know the financial health of the company you invest in. If you want to borrow money they must evaluate if you are a good risk. In other words they look at you just like they look at the financial health of a company (balance sheet + income statement + cash flow).
They were analyzing risk, I asking them for money, they have a right to do that. If they said no, then it meant that I was buying too much house for my income, free advise without paying for it. I was approved.
Why people think they have a right to OPM is beyond me.
"did you think landlord capital comes out of thin air?"
As a matter of fact, it does. You buy a duplex and the bank writes a check to the seller. You live in the duplex and your renter pays you rent which you use to make your duplex payment. The check written to the seller did come out of thin air wit permission of some federal agency whether it is the VA, Rural Development, FHA or some other guarantor. Now you can buy up to a four unit with an FHA loan as long as you live in one of the units. They call it a "quadplex".
Not much choice in this country; people who live in open air without paying rent cannot secure their possessions and often lose them to theft, exposure, and/or police action, without recourse.
I think I have your answer. Post incessantly on city data complaining about everything you can think of. Wait, that's what you do now! The enviable life of many of us. If only we had all that free time!!
Back in 2011, if you have an adjusted gross income of over $166,800, your mortgage interest starts to get phased out. For every $100 of income over $166,800 you lose $3 of itemized deduction X 33.3% up to a maximum loss of 80 percent of your itemized deductions. Talk about another overly complicated rule the IRS/government has implemented.
Example: You make $266,800 and you have $50,000 in mortgage interest deductions. Take $266,800 – $166,800 = $100,000. Then take $100,000 X 3% = $3,000. Finally, take $3,000 X 33.3% = $999. You can now only deduct $49,001 ($50,000 – $999) from your income instead of originally $50,000.
Not much choice in this country; people who live in open air without paying rent cannot secure their possessions and often lose them to theft, exposure, and/or police action, without recourse.
The mortgage interest deduction benefits higher earners disproportionately, if you aren't aware of this you haven't looked into the topic much
I think Lowexpectations has a thing for me. He follows me around the forum and makes statements but never counters with substantiated proof of his statement. Then again, your definition of high income may be different than mine. Here ya go..
"High-income taxpayers are also subject to limits on exemptions and deductions in 2013. The income threshold for the Pease and PEP (personal exemption phaseout) limitations is $300,000 in adjusted gross income (AGI) for joint filers and $250,000 for singles.
The Pease limitation reduces the value of charitable contributions; mortgage interest; state, local, and property taxes; and miscellaneous itemized deductions.
For 2013, this limitation is the lesser of 3% of AGI above the threshold up to 80% of the amount of the itemized deductions otherwise allowable. The PEP limitation reduces the total personal exemption by 2% for every $2,500 of income above the same income thresholds with no upper limitations. That means it's possible for some taxpayers to completely phase-out of their personal exemptions."
Stating a "line needs to be drawn somewhere" is not a reason, let alone a reason based on a a risk analysis or some other financial analysis.
My opinion is the amount of down payment that should be requested depends on several factors, like who is getting the loan, location of the home, historic market prices for the home/area, etc.
Well you don't need 20% as a down payment but the number is largely subjective. American lenders seem to feel that's a pain point of defaulting on a mortgage. If you have little to no equity it's easier to walk away and the more equity you have the harder it is to do.
I think Lowexpectations has a thing for me. He follows me around the forum and makes statements but never counters with substantiated proof of his statement. Then again, your definition of high income may be different than mine. Here ya go..
"High-income taxpayers are also subject to limits on exemptions and deductions in 2013. The income threshold for the Pease and PEP (personal exemption phaseout) limitations is $300,000 in adjusted gross income (AGI) for joint filers and $250,000 for singles.
The Pease limitation reduces the value of charitable contributions; mortgage interest; state, local, and property taxes; and miscellaneous itemized deductions.
For 2013, this limitation is the lesser of 3% of AGI above the threshold up to 80% of the amount of the itemized deductions otherwise allowable. The PEP limitation reduces the total personal exemption by 2% for every $2,500 of income above the same income thresholds with no upper limitations. That means it's possible for some taxpayers to completely phase-out of their personal exemptions."
I don't follow you around I just happen to notice the nonsense you post and correct it. Your responses are typically rambling and mix in you calling me a liberal. I will await your well thought out response
Little of the deduction’s benefits go to households that have difficulty affording a home. Data from the Census Bureau’s American Housing Survey show that in 2011, 10.5 million homeowners faced what HUD calls “severe housing cost burdens,” meaning they paid more than half of their income for housing. Some 90 percent of those homeowners (and about 40 percent of all homeowners) had incomes below $50,000, yet JCT estimates for 2012 show that homeowners with incomes below that level received only 3 percent of the benefits from the mortgage interest deduction.[5]
At the same time, 77 percent of the benefits from the mortgage interest deduction went to homeowners with incomes above $100,000, almost none of whom face severe housing cost burdens. Some 35 percent of the benefits went to homeowners with incomes above $200,000; taxpayers in this income group who claimed the deduction received an average subsidy of about $5,000.
The deduction’s benefits are concentrated among higher-income households for several reasons.
Close to half of homeowners with mortgages — most of them middle- and lower-income families — receive no benefit from the mortgage interest deduction.[6] Some of these households do not owe federal income taxes, even though they typically pay substantial federal payroll taxes and/or state and local taxes. Others claim the standard deduction rather than itemize deductions.
Homeowners with higher incomes tend to have more expensive homes and thus more mortgage interest to deduct.
The deduction’s value depends on a household’s marginal tax rate, so households in higher tax brackets benefit more. To see why, consider this example of two households. An investment banker making $675,000 who has a $1 million mortgage and pays $40,000 in mortgage interest each year receives a housing subsidy of about $14,000 annually from the mortgage interest deduction. The banker pays about 65 cents per dollar of mortgage interest, and the taxpayers pick up the remaining 35 cents.[7] By contrast, a schoolteacher making $45,000 and paying $10,000 a year in mortgage interest on a more modest home receives a housing subsidy worth $1,500 annually. Here, the family pays 85 cents of every dollar of mortgage interest and taxpayers pick up 15 cents. The banker’s subsidy is not only larger than the teacher’s in dollar terms, but also represents a greater shareof the banker’s mortgage interest expenses.
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