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Old 07-23-2007, 03:48 PM   #41
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Really? Are there some cases where it's not deductible?
There are, but for the typical American, the most likely explanation is that the total of their itemized deductions -- including their mortgage interest -- falls below the standard deduction.

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Old 07-23-2007, 03:53 PM   #42
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There are, but for the typical American, the most likely explanation is that the total of their itemized deductions -- including their mortgage interest -- falls below the standard deduction.
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That would be me, the typical American. In the 20 years of home ownership, I was eligible to itemize for 2 years, but chose not too, because the saving was less $20.
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Old 07-23-2007, 05:04 PM   #43
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Those of you who just paid off their houses, can you mention the figures as well?
Im in the market for a house right now and Im 30 years old, but i am very unlikely to be able to pay off a $800k house(which is a median price for a 3-bd single family in my hood, the Bay Area(peninsula part) in 10 or so years.
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Old 07-23-2007, 05:18 PM   #44
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A bay area ER is going to be a tough one. Pretty spendy.

I moved to Excramento from santa clara. You can get the same house up here for half price.

But you'll have to spend a little of your savings on some air conditioning...
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Old 07-23-2007, 06:19 PM   #45
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Those of you who just paid off their houses, can you mention the figures as well?
Im in the market for a house right now and Im 30 years old, but i am very unlikely to be able to pay off a $800k house(which is a median price for a 3-bd single family in my hood, the Bay Area(peninsula part) in 10 or so years.
That would be pretty tough to pay off.

I bought a $160K house ($32K down) in 2002 and paid it off in 4 years. It is now worth $200K. I could sell it, and since I am earning more now, I could put $200K down and buy a $435K house and pay that off in another 4 years and so on. I don't want anything more than what I have, though, since I live alone and this house is very nice for me. When I bought it, I could afford more but really didn't need to spend more to get what I wanted.

Moving up to a more expensive home more than once doesn't sound like much fun. Who wants to move every 4 years. Besides, you probably couldn't get much at all for $200K where you live. Guess that is a big problem that you take on when you decide to live there.
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Old 07-24-2007, 07:48 AM   #46
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Mine started with a mortgage of only $60k, but we also used the proceeds from the sale of the beach house to buy the 4 acres of property and for about 1/2 of the building costs. I was the GC on the project, so we had some major savings there. Total investment in the house is $244, it is worth $475k-$500k now, according to our realtor (waterfront).
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Old 07-24-2007, 12:22 PM   #47
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Moving up to a more expensive home more than once doesn't sound like much fun. Who wants to move every 4 years. Besides, you probably couldn't get much at all for $200K where you live. Guess that is a big problem that you take on when you decide to live there.
In most of the bay area, $400k might get you into a two bedroom condo/townhouse. Add in another $300+ for HOA, and you have the equivalent of at least another $50k in housing cost.

Fortunately, rental costs are often less than 50% of purchase costs for the same property.

Even with two professional salaries, the cost of housing can make a severe impact on the ability to save or ER. Although there are some people who are still purchasing at these extraordinarily high prices (and with higher interest rates!), I think many are finally realizing that dumping a majority of post-tax income has deleterious effects on peace of mind and lifestyle.
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Old 07-24-2007, 12:27 PM   #48
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Mine started with a mortgage of only $60k, but we also used the proceeds from the sale of the beach house to buy the 4 acres of property and for about 1/2 of the building costs. I was the GC on the project, so we had some major savings there. Total investment in the house is $244, it is worth $475k-$500k now, according to our realtor (waterfront).
Now THAT sounds ideal.
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Old 07-25-2007, 06:59 PM   #49
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Really? Are there some cases where it's not deductible?
Yes. In fact, it is quite common. Mortgage interest is only deductible if you itemize your deductions. If you take the standard deduction, then your mortgage interest is below your standard deduction and is therefore not deductible. And since most Americans take the standard deduction...

Tax Tip: Choose best deduction method for your tax situation

then it is quite common indeed. Also, even for those people who itemize, the mortgage interest is only beneficial to the extent that the total itemized deductions exceed the standard deduction.

Of course, you will not hear these facts from the lending industry. The media simply repeat over and over again that "mortgage interest is tax deductible" to the point where most people just assume it to be true without understanding the true facts.

P.S. The total of my itemized deductions (including mortgage interest) is less than my standard deduction, so I get no tax benefit or deduction for my mortgage interest.
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Old 07-25-2007, 07:47 PM   #50
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One of the hiccups in the great mortgage debate.

Most forget that an early retiree has to create income by withdrawing from their portfolio in order to make the payment - and paying taxes on those withdrawals - that gains them NOT a full deduction of the interest, but really only that portion of the interest that exceeds the standard deduction.

So you're losing money on every payment, but I imagine some feel they're making it up on the volume...?
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Old 08-08-2007, 03:26 PM   #51
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Bow-Tie, I'm going to resurrect your thread to make my official announcement---with a $3,305.61 check handed across the counter today at the bank--we have paid off the house!

WooHoo! It is an awesome feeling, especially knowing that we have been maxing out the retirement savings at the same time, and now the taxable savings are going to kick into high gear! WooHoo!

Incredible to think we've paid off $106k total in the past 3 1/2 years (consumer debt plus the mortgage). To heck with the diet--we're going out to the Mexican restaurant tonight for a Grande beer or two!
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Old 08-08-2007, 04:10 PM   #52
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Wow, that is an awesome amount of debt reduction. Congrats. You earned that grande
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Old 08-08-2007, 04:36 PM   #53
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Bow-Tie, I'm going to resurrect your thread to make my official announcement---with a $3,305.61 check handed across the counter today at the bank--we have paid off the house!

WooHoo! It is an awesome feeling, especially knowing that we have been maxing out the retirement savings at the same time, and now the taxable savings are going to kick into high gear! WooHoo!

Incredible to think we've paid off $106k total in the past 3 1/2 years (consumer debt plus the mortgage). To heck with the diet--we're going out to the Mexican restaurant tonight for a Grande beer or two!
Sarah
Woo-hoo!!! CONGRATULATIONS! It's a great feeling and it doesn't go away, either. Something that really floored me was how fast the money started piling up, once I didn't have to pay Chase Mortgage every month. Better start thinking about what to do with all the $$$$ that is going to start piling up very quickly! Enjoy your celebration tonight.
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Old 08-09-2007, 10:49 AM   #54
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Bow-Tie, I'm going to resurrect your thread to make my official announcement---with a $3,305.61 check handed across the counter today at the bank--we have paid off the house!...we're going out to the Mexican restaurant tonight for a Grande beer or two!
Sarah
Hey, congrats Sarah. Rock on.

It might be just me, but that big ole beer should taste extra delicious with that kind of news.
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Old 08-12-2007, 08:49 PM   #55
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Way to go Sarah ! You paid off a lot of money in a short period of time.

For some reason I didn't feel any different once we paid off the mortgage, and I thought I would. Maybe it's because I had to dump a ton of money into home repairs after paying the sucker off. That was kind of discouraging as I will spend about $50k once I'm done. Plus, it's the boring kind of repairs, dry rot, cracked retaining wall, new porch, new deck (that's kind of nice as the old one was becoming unsafe), new shower wall, new chimneys, new kitchen floor (OK, that's nice too) ...

If I sold my house today, financially I think I'd break even except that I wouldn't have paid rent.
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Old 08-13-2007, 09:10 AM   #56
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Wow Helen, that is a bunch of work! We just started the list of stuff that we never did when we built the house. The list isn't too disheartening, mostly stuff like finally put down countertops in the kitchen (been living with the sealed plywood while we debated various materials) and the crown molding, plus windowsills and misc trim work.

You will be glad when all the repairs are done and the house will appreciate over the long haul. New floors are great, and anything to improve outdoor living spaces like a deck are my favorite ways to spend money!

Sarah
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Old 08-16-2007, 12:34 PM   #57
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Congrats Bow Tie.

I'm only 6 months into my 30 year mortgage, and I'm already dreaming of the day I pay it off.
I agree with you I am also dreaming of paying off my 30 year mortgage as I am only a year into my payments. I was thinking of refinancing but I rather get my loans paid off and live debt free.
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Old 08-16-2007, 07:25 PM   #58
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Congrats Sarah. Having paid off my mortgage 3 years ago, I can tell you that it's nice having one less check to send off every month.

The down side is that my FICO score declined, because I no longer have installment debt.
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Old 08-16-2007, 09:19 PM   #59
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I did not like going the mortgage route. We built our 2 houses doing all the work ourselves (except excavation and placing concrete). The last house required working most weekends for about 1 year. We diverted the money that would have gone into savings/investments into buying materials as we progressed with the building. Total construction cost was about 50% of having it built by a contractor, which is a big savings, especially considering no interest that would normally be paid over 30 years.

It is a good feeling to know you do not have a large monthly mortgage payment, especially going into retirement.
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Old 08-16-2007, 11:27 PM   #60
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This thread has been very motivational. First I'd like to offer my congrats to everyone who has arrived or is close to getting there, keep up the good work. We are about to close on the first step of our dream by buying <20 acres and we can't wait to get out there but now reading this I'm even more motivated to pay it off sooner.

packrat44, we're going to be doing everything ourselves as well except for septic and can't wait, nice to see other people out there saving the money and doing the hard work.
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