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Does anyone have any thoughts on how lenders would react if Congress eliminates the Mortgage Interest Deduction? We are considering a contract for a new construction. Will we be at risk for a big change in how much banks will lend or how much cash reserves they will require if the deduction goes away?
Lets start the 8th or 9th thread on this this MONTH. Oh wait, TOP did already.
That's helpful. Thanks.
I don't think banks take into account the savings from the deduction when they evaluate the risk of the borrower.
I would think banks would have a bigger problem in the decline in demand for mortgages should the deduction be scaled back or eliminated.
Banks don't consider the interest deduction in their lending criteria. You shouldn't either if it's the difference of being able to afford VS not afford a property. I love how much hype this has gotten. Don't get me wrong, I love it because it saves me money, and Realtors rely on it to use in their BS logic for owning real estate. But at the end of the day, it should be gravy, not something you need. If it is, you're borrowing too much.
I agree with NYC. The main impact would be that demand would go down. And that realtors won't be able to include it in their calculations pages.
If it is conventional wisdom that demand would go down, wouldn't that affect new construction more than other RE choices. For example, would banks be more conservative about %'s sold in new construction before lending in a building?
Owners have tons of gravy, including a multi-million dollar payout when they retire or 30 more years of rent free living. The deduction is almost a moot point, and most owners earn too much anyway. Take the million dollar lottery payout at retirement and be happy.
ain't gonna happen!
> Owners have tons of gravy, including a multi-million dollar payout when they retire or 30 more years of rent free living. The deduction is almost a moot point, and most owners earn too much anyway. Take the million dollar lottery payout at retirement and be happy.
what are you talking about?
notadmin: I believe dealboy is expressing the view that the bubble in RE prices will go on forever and you can't lose money in real estate. Therefore the thousands that you save in mortgage deductions are so trifling compared with the outsized gains in RE that the removal of this deduction will not make even the merest ripple in the upward surge of sales and prices.
Charts, history, economics and bursting bubbles will apparently never affect deal boy's certainty in real estate profits.