Clinton Apologises
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Yeah, i'd phase it out over time so it doesn't wallop homeowners. I'm not sure there's a good reason to encourage home ownership.
As I always say, fuck if I know, man. It's a great big fucking mess.
Agreed on point number two.
But I remember when I bought my first home, shit hole that it was.
I remember kicking myself in the ass for every previous month I handed over a wad of cash to the land lord. There is a certain independence and confidence that comes from being able to say sure it's a dump, but it's mine as opposed to going to a land baron once a month with your hat in your hand. With nothing to show for it.
That may be a core philosophical difference between us.
If we eliminate a great amount of homeowners and plunge more and more into renting it would seem logical that most property would be owned by fewer and fewer. Would you take that extra revenue and put it into subsidized housing?
IOW lots more people dependent upon the government just for a place to live? Is that the goal or merely a by product?
WSS
Agreed on point number two.
But I remember when I bought my first home, shit hole that it was.
I remember kicking myself in the ass for every previous month I handed over a wad of cash to the land lord. There is a certain independence and confidence that comes from being able to say sure it's a dump, but it's mine as opposed to going to a land baron once a month with your hat in your hand. With nothing to show for it.
That may be a core philosophical difference between us.
If we eliminate a great amount of homeowners and plunge more and more into renting it would seem logical that most property would be owned by fewer and fewer. Would you take that extra revenue and put it into subsidized housing?
IOW lots more people dependent upon the government just for a place to live? Is that the goal or merely a by product?
WSS
But for some people it makes more sense for them to rent rather than stretching themselves to buy. While I might agree with you that owning might feel better for some, it also becomes an albatross for others, especially those that bought too much house and fall on hard times. They often have "nothing to show for it" either even though they own. Removing the tax preference would remove the distortions and encourage people to make decisions based on what's best for them rather than pushing them towards ownership. The deduction also pushes home prices up and encourages people to take on large amounts of debt. This isn't a good idea. It's also why a credit like in Simpson-Bowles (again, haven't checked this, but I remember it being in there) is a better idea. If you want to help people own homes, give them a credit for buying a home. Don't subsidize the debt you take on when you buy a home.
As for the extra revenue, I don't think I'd plunge into anything but the general fund.
It's funny. We're looking to buy right now and going through this. When you do all the work with the loan officer you have a certain idea of what you can afford. And then you figure in the tax preference, which goes a long way in an expensive market like LA, you suddenly realize you can afford a more expensive house than you thought because of the tax preference. Is this a good idea, to make me and everyone like me afford more home than we normally could? I don't think so. It's a distortion that encourages Americans to take on more debt.
....Though, like you, I hate pissing away rent every month.
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>>I'm not sure there's a good reason to encourage home ownership>>
Interesting comment, Heck. Haven't thought this through but this is my initial take.
Qualitatively, I believe home ownership fosters pride in property with an associated 'halo effect' across aspects that have positive outcomes. Of course, we all know of the Fred Sanford-type house around the corner so this, definitely, is a generalization.
On the more tangible front, however, I know from personal experience that purchasing a home drives many purchases that would't occur with renting. Not only many washing machines, dryers, but also snow shovels, furniture, , etc. etc.
Ideally the above would drive the supply chain for many US manufacturing companies. Unfortunately, we all know that many - if not the vast majority -of items purchased come from overseas.
So, on balance, I believe home ownership is 'good' on both qualitative and quantitative measures. I also know that home ownership doesn't make a lot of sense for people who do own homes. Given the myriad of variables, renting makes absolute for many people - people who would be better off without a mortgage and that mythical - or at least, less significant - appreciation.
Back to work...............
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That's sort of interesting. I've never heard that case made - that encouraging home ownership spurs the purchase of consumer goods for the home. Maybe that's true, though the owner of a rental home also buys a lot of that stuff, and the renter also buys some of that stuff, so it's probably not a big boost if there is one at all. (I.e. I didn't buy a washer and dryer or fridge or TV for the house I rent, but I did buy lawn equipment and furniture. In the end, all of those purchases were all made by someone.) Also, it'd have to bring in more than the cost of the deduction, which is somewhere between $80-$100 billion a year. I think it's highly unlikely that the amount of increased economic activity/purchases spurred by home ownership - that would not have been made without the deduction, mind you - would be in excess of $80-$100 billion a year.
After all, there are some studies that show that the mortgage interest deduction doesn't really encourage home ownership at all, but just makes it easier for those who were going to buy homes anyway to buy homes, or to buy more home than they otherwise would have.
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>>....Though, like you, I hate pissing away rent every month.>>
You could always pith it away on a house with depreciating value - like the place I have in Fort Myers. Although I've refianced and combined mortgages, it's safe to assume I'm 40% of purchase value under water.
The old rules don't always work any more.
But you know all this.
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>>After all, there are some studies that show that the mortgage interest deduction doesn't really encourage home ownership at all, but just makes it easier for those who were going to buy homes anyway to buy homes, or to buy more home than they otherwise would have.>>
I have mixed emotions about mortgage deduction. Kind of like low interest student loans. Maybe both 'encourage' more expensive purchases.
This is a real can of worms.
I also see a phase out of the mortgage deduction over time. Kind of the story of that mouse in a pot of water on top of the stove. Slowing you turn, step by step.
At one time, interest on car loans, credit cards, etc. were deductible. While not of the same scale of a home purchase, these were taken away and I don't recall much noise. Maybe I was young and it wasn't relevant to me so I didnt pay attention.
By the way, there are tons of tax cheats using Home Equity Loans to pay for expenses other than home improvement. I believe the law actually stipulates these loans be used for only that purpose.
Maybe we'd be surprised if that 'loophole' was closed.
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I don't think that's true. Home equity loans are just loans that use the equity in your home as collateral. I don't think there are any restrictions on what you do with the money you borrow.
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It might depend on the bank...
but I know a he loan can be used to pay off a car and medical bills.
we did it. @@
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I believe the greater reason to own a home, is to be able to own it = GGG, as in, do the garden as you want,
yard landscaping, home improvements/re-designed interiors...
the benefit is, once it's paid off, assuming you bought a home you planned on staying in forever... we did....
once it's paid off? Priceless.
Pay it off early, we did bigtime, and the benefits are more dramatic financially.
But not everybody is a given to benefit from home ownership just to own.
It's more complicated than that.
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I don't think that's true. Home equity loans are just loans that use the equity in your home as collateral. I don't think there are any restrictions on what you do with the money you borrow.
I don't think that's true. Home equity loans are just loans that use the equity in your home as collateral. I don't think there are any restrictions on what you do with the money you borrow.
yes that's true. You can use it for anything you want. They just called some of them home improvement loans.
WSS
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>>I don't think that's true. Home equity loans are just loans that use the equity in your home as collateral. I don't think there are any restrictions on what you do with the money you borrow.>>
That's what I thought too - until I hear a story about how the IRS basically ignores the requirement that the money be used to improve your home because, well, it would have to do a lot of chasing.
But the IRS code does stipulate. I might look it up when I have a minute or two.
I've been wrong before - I think.
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I believe the greater reason to own a home, is to be able to own it = GGG, as in, do the garden as you want,
yard landscaping, home improvements/re-designed interiors...
the benefit is, once it's paid off, assuming you bought a home you planned on staying in forever... we did....
once it's paid off? Priceless.
Pay it off early, we did bigtime, and the benefits are more dramatic financially.
But not everybody is a given to benefit from home ownership just to own.
It's more complicated than that.
I believe the greater reason to own a home, is to be able to own it = GGG, as in, do the garden as you want,
yard landscaping, home improvements/re-designed interiors...
the benefit is, once it's paid off, assuming you bought a home you planned on staying in forever... we did....
once it's paid off? Priceless.
Pay it off early, we did bigtime, and the benefits are more dramatic financially.
But not everybody is a given to benefit from home ownership just to own.
It's more complicated than that.
You never really OWN anything. You may possess it for a few decades, then your gone,
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I don't think that's true. Home equity loans are just loans that use the equity in your home as collateral. I don't think there are any restrictions on what you do with the money you borrow.
I don't think that's true. Home equity loans are just loans that use the equity in your home as collateral. I don't think there are any restrictions on what you do with the money you borrow.
Furthermore that's 1 of the reasons for the housing crisis.
Interest rates go down, housing prices go up.
We have all seen the ads for home equity loans.
Fix the place up, pay some bills take a vacation! And you could get an equity loan for the whole new value of your home!
WSS
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