To Mortgage or Not to Mortgage (Pittsburgh, McKeesport: real estate market, renting, crime)

[Moby Hick]

Originally Posted by Hopes

His definition of livable is different from yours.

I do have a very refined sensibility.

[CaptainPittsburgh]

Congrats, PP! You have one of my favorite general worldviews of the CD board posters, and I'm excited to see where you go next.

I'm sure you already know this, but with your frugal mentality a modest mortgage would be no problem whatsoever. I say keep your options open and take the route that makes sense once presented...which I'm also sure is what you are doing, hahaha.

[Moby Hick]

Originally Posted by trackstar13

Now back to reality mortgages can be very helpful, especially if you are like me and have very few tax deductions.

The tax benefits of owning a house or having a mortgage mostly apply when you get into more expensive houses. They don't help at all if you don't have enough deductions to make it worth your while to itemize. Even if you get a bad rate and borrow the whole of $50,000, that's still less than $4,000 in interest for the first year of the loan. Even with property taxes, that leaves you below the standard deduction for a single person (about $6,000).

Most people will have at least a few other deductions, but you shouldn't count the full dollar amount of your deduction. Just the extra benefit you get by owning/borrowing. In other words, how much over $6,000 it is after you've added in your non-housing deductions.

[robrobrob]

I think you will get a much nicer house if you get a mortgage. Personally, I would look at Natrona or Tarentum assuming the commute is okay for your job. Sharpsburg is rougher than you think.

Not sure who high you want to go but you might be able to squeeze into Springdale or Cheswick.

[tclifton]

Independent of the houses, if you can go without a mortgage, then my opinion is to do so. With no mortgage you have no risk, so even though you won't have the money right away to do reno, you'll be able to use all of your income to save and do it later. Plus there's a feeling of peace and calm that you get when you own your house outright.

[tclifton]

Also, re: the tax deduction question:

(from daveramsey.com )

Let's do the math. If you have a home with a payment of $900, and the interest portion is $830 per month, you have paid around $10,000 in interest that year, which creates a tax deduction. If, instead, you have a debt-free home, you would in fact lose the tax deduction, so the myth says keep your home mortgaged because of tax advantages.

If you don't have a $10,000 tax deduction and you're in a 30% tax bracket, you will have to pay $3,000 in taxes on that $10,000. According to the math, we should send $10,000 in interest to the bank so we don't have to send $3,000 in taxes to the IRS. Personally, I think I will live debt-free and not make a $10,000 trade for $3,000.

[eschaton]

If you want to push your budget higher a bit, there's a few houses which would really suit you.

This one has awful insulbrick on the outside, but the inside seems intact and in fine shape.

This one is even nicer. Strangely they leave the outside shot to the end, but it isn't bad at all.

Here's a nice home in Clairton.

And an amazing one in McKeesport.

[trackstar13]

Originally Posted by Moby Hick

The tax benefits of owning a house or having a mortgage mostly apply when you get into more expensive houses. They don't help at all if you don't have enough deductions to make it worth your while to itemize. Even if you get a bad rate and borrow the whole of $50,000, that's still less than $4,000 in interest for the first year of the loan. Even with property taxes, that leaves you below the standard deduction for a single person (about $6,000).

Most people will have at least a few other deductions, but you shouldn't count the full dollar amount of your deduction. Just the extra benefit you get by owning/borrowing. In other words, how much over $6,000 it is after you've added in your non-housing deductions.

True I wasn't thinking about the purchase price. The only way it would work in the OP's case would be if he were to get the max mortgage at a higher interest rate and buy a house with very high property taxes.

[PreservationPioneer]

That house in McKeesport is pretty sweet, Eschaton! That is some serious paneling.

[Hopes]

Originally Posted by trackstar13

True I wasn't thinking about the purchase price. The only way it would work in the OP's case would be if he were to get the max mortgage at a higher interest rate and buy a house with very high property taxes.

It's not true. Everyone is forgetting that there is such a thing as 10 year mortgage.

Plus, county, township and school taxes on a 50k house are much higher than people think.

Plus, it's easy to increase deductions via donating clothes to Goodwill, etc., to make up the difference.