3 ms·
In the first year of a 30y mortgage, yes interest is a big component... But even in year 5 or especially in year 10+ interest is much smaller and the principal
by pbnjay 5y ago
In the first year of a 30y mortgage, yes interest is a big component... But even in year 5 or especially in year 10+ interest is much smaller and the principal impact greater. The long term impacts of ownership are the benefit, of course a large purchase will not stack up against renting in the short term!
- tclancy 5y agoYes, unless I missed something, the analysis doesn't account for the decrease in interest costs over time. Still an interesting piece, just would be a fairer comparison.
- hellisothers 5y agoAlso that interest is largely (if not totally) tax deductible.
- niij 5y agoAlmost 90% of Americans file the standard deduction which precludes you from deducting mortgage interest. https://taxfoundation.org/90-percent-taxpayers-projected-tcja-expanded-standard-deduction/ https://taxfoundation.org/90-percent-taxpayers-projected-tcj...
- sumtechguy 5y agoThe std deduction is fairly large now. You have a tough time getting past it for most people. There is also a cap on how much you can deduct. When I had a mortgage I calculated that about half way through the loan I would no longer be able to deduct the interest because the std one was bigger. One guy I worked with said this 'i love using the standard deduction it means I am not paying money to get my money back I am getting a lower tax rate'.
- niij 5y agoThat person has a good point. It's definitely a lot simpler.
- hellisothers 5y agoWow TIL it’s 90% that use standard deduction, thanks for the tip, I’ll factor this in when discussing this in the future.