One of the biggest subsidies / handouts is the home mortgage interest deduction. Luckily it is capped at like $750k, so the truly impoverished are taken care of.
Housing market
- Thread starter simply1
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Indeed.
The truly impoverished don't own their residence.
Even if they did, they're not likely to be paying much interest on a relatively small loan to cover what is likely a very modest home by Cyclone Fanatic standards. They're not going to have much income tax liability or have a very high marginal rate, either, so the impact of the deduction is very limited.
But if you're part of a two-income household of two college grads with their kids who bought a $675,000 house in a prosperous midwestern suburb (e.g., Ankeny), then the MID is a nice windfall.
Actually that has become a very minimal thing in the Midwest the last few years. With the new high deduction for taxes and low internet rates. Take a 500k house with 20% down. You have your 2.5% internet rate and your deduction first year is less than 10k. If you are buying a house now, with 6-7% rates, it probably does make a difference.
That's true, but again - who IS using itemized deductions? NOT the lower-income folks, and not even medium-income. So who does this subsidy help?
If the goal is to help people own their own home, there are better ways.
We have tried other ways to get people into a home and the programs usually have too much red tape and fall flat. Remember that 1st time home buyer credit? The Obama administration ran that special during a recession and when banks weren't lending to anyone.
Just a couple:
-Downpayment Act $25K for a downpayment
-No/Low Payment Mortgages through Fannie/Freddie
-HUD has numerous programs
-DPA programs
I did some work with Habitat. Went over documents with borrowers and a general discussion about the program.
Folks working there said the biggest challenge is getting those borrowers to come back even after taking the step of submitting docs and talking to a representative.
No idea if that still holds true, but surprising at the time
Hard to believe (not hard to believe!) that lenders would play with this type of fire again. What the hell, moral hazard for all!
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Just for fun:
Zillow - 366,400
Redfin - 409,545
Movato - 377,654
Those all seem insanely high to me for my house.
No. Just a little slower. Generally they bid higher since approval may not be as certain. I know this was a while ago but when the wife and I sold our first house, we had 2 offers, a pre approved for just under ask and an FHA for a little over ask. We took the guaranteed money knowing that FHA could have small hiccups and it takes about a month longer with paperwork. (Side note, apparently my FIL worked in the same area as the FHA people and they were bad mouthing us left and right for awhile). With the current environment, everything takes another 3-4 weeks so paperwork may work itself out.
I bet that doesn’t happen nearly as bad in Des Moines. The lack of inventory is still an issue. So there will be fewer buyers but fewer houses on the market too.
I have a 6-figure difference between Zillow and Movoto (which also has demonstrably significantly wrong information). Redfin doesn’t have enough info. Those sites are pretty good if you’re in an area with a lot of data and comps, but when they go wrong, they go WAY wrong.
Zillow showed 292. Movoto says 172 and has picture of our neighbors house and Redfin doesn’t even have anything in the town. Having been an appraiser, eyeballing— I would put ours in that 260-280 area. Small town Iowa. Although some have pushed higher and Zillow could be possible pending the buyer.
Important to understand with FHA the PMI is less but is for the life of the loan.
But with cash offers and needing to fix things, pretty sure fha around here were not winning bids.
Probably not. Most people aren’t willing to take a risk that there is a hiccup especially if they are buying a house with proceeds from that house. Many of the these were first timers or houses that people didn’t need the funds as fast. More I think about it, it’s weird the amount of FHA loans we had coming into us compared to conventional. Even had some nice homes that needed to have some work done to them to get them back to condition. Houses that were 200k plus. In a town of a couple thousand you didn’t find many houses over 200k so it was odd that they would still qualify.
