Old farts of ATOT - how did you buy homes with 8-10%+ mortgage rates?

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Scarpozzi

Lifer
Jun 13, 2000
26,389
1,778
126
I can only hope after all this COVID shit that both Companies... and ESPECIALLY PEOPLE... Realize that you don't need to live in the middle of a fucking shithole metro-area in order to work a job that earns 6+ figs.


To be honest though, I think stuff like that mainly comes from people that apply for jobs with high skill levels that say "Yeah, nah.... I'll work remotely. I'm not moving and working in an office".
I wish I had more access to remote jobs. It may not make a lot of sense saying that, but it's hard to sift through jobs online to find real ones versus crappy ones. It's also rough here because good airports are over 3 hours away. It makes travel more costly to bigger cities.
 
Nov 8, 2012
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I wish I had more access to remote jobs. It may not make a lot of sense saying that, but it's hard to sift through jobs online to find real ones versus crappy ones. It's also rough here because good airports are over 3 hours away. It makes travel more costly to bigger cities.

Shit if I can find one - anyone can.

Anything that revolves around a computer can be done remotely -Any company that says otherwise is full of shit.

Prior to my current job I was with accounting / consulting firms - so I have plenty of contacts still with them... They are all in the same boat, clients are telling them to work remotely, so everyone is doing jus tthat.
 

Scarpozzi

Lifer
Jun 13, 2000
26,389
1,778
126
Shit if I can find one - anyone can.

Anything that revolves around a computer can be done remotely -Any company that says otherwise is full of shit.

Prior to my current job I was with accounting / consulting firms - so I have plenty of contacts still with them... They are all in the same boat, clients are telling them to work remotely, so everyone is doing jus tthat.
I definitely see your point. I've basically proven that my job can be done remotely. (not been to work since March 10)

I was just hoping I could snag a job making near 6 figures (almost did 15 years ago, but didn't want to relocate). I'll likely hold tight because I've got benefits that outweigh most salary gains... I have excellent time off and killer retirement perks. I can basically take 3-4 trips a year and still have more time to burn. (not counting 3 weeks of holiday pay) What's worse is when you consider the IT jobs when you're on-call. I gave that stuff up in 2015 and prefer to line my own tasks up so I can stay ahead of the workload more easily and have near zero stress.

I put my wife to work after we got married, so I let her worry about making the big bucks. :cool:
 

brianmanahan

Lifer
Sep 2, 2006
24,419
5,852
136
I recommend 15 year if you can swing it. But I like cash in full if you have the money.

get the 30 year instead of paying in cash, invest the rest in tesla

free house and all the hermes scarves your wife will ever desire
 
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Red Squirrel

No Lifer
May 24, 2003
68,458
12,612
126
www.anyf.ca
I would love to see working from home become more the norm instead of a niche thing. Then I can live in a cheaper area or even off grid and still work a good paying job. I make like 80k, I can only imagine how much money I'd actually have if I could live off grid and hardly have any bills and lower taxes. But then if everyone did this off grid land prices would go up and so would the taxes, and pays would go down since people would have less bills and be willing to work for less... so it's a catch22 I guess.

Lot of jobs can be done from home the issue is companies' willingness to allow and setup for it.
 

PingSpike

Lifer
Feb 25, 2004
21,749
584
126
Easy. Have a middle-class level home that has a value less than $100k.

Goodluck finding that shit now.

My parents house, which is basically the same quality as mine cost them $33,000 back in 1980. My mom immediately said "I know, I should have bought two right?" after she told me that. My parents paid off the mortgage in like 7 years or something. The bank tried to talk them out of it.

You know when you read those mortgage advice things that say stuff like "You save so much on your taxes by owning instead of renting because you can deduct your mortgage!" and "Pay one extra mortgage payment a year and you'll pay your house off 12 years early!" Those statements are lies, but they used to be true and the mortgage and real estate industry likes it when people buy houses so they keep saying them.

You see, you deduct your mortgage interest and back then the payment had a lot of interest and a lot less principal. So that deduction really added up even on a basic house. And when you paid one mortgage payment toward your principal, it actually put a good dent in the principal, because there wasn't that much of it to begin with!

I calculated, actually calculated, what I saved on taxes when I first bought my house with its massive principal. Once I subtracted the savings from the standard deductible off when I first bought my house ($200,000 mortgage, $250,000 house) I saved a whopping $800 a year. I spent far more than that on maintenance and repairs every single year. And that was the first year, the number goes down after that. Eventually I just ended up taking the standard deductible and that's before Trump boosted that way up. I haven't looked but I bet a reasonably priced house never saves you any money in taxes now.

The only time the mortgage deductible makes a big difference is if you buy a mansion or your house is really expensive. So basically its a tax break for wealthy people.
 
Nov 8, 2012
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My parents house, which is basically the same quality as mine cost them $33,000 back in 1980. My mom immediately said "I know, I should have bought two right?" after she told me that. My parents paid off the mortgage in like 7 years or something. The bank tried to talk them out of it.

You know when you read those mortgage advice things that say stuff like "You save so much on your taxes by owning instead of renting because you can deduct your mortgage!" and "Pay one extra mortgage payment a year and you'll pay your house off 12 years early!" Those statements are lies, but they used to be true and the mortgage and real estate industry likes it when people buy houses so they keep saying them.

You see, you deduct your mortgage interest and back then the payment had a lot of interest and a lot less principal. So that deduction really added up even on a basic house. And when you paid one mortgage payment toward your principal, it actually put a good dent in the principal, because there wasn't that much of it to begin with!

I calculated, actually calculated, what I saved on taxes when I first bought my house with its massive principal. Once I subtracted the savings from the standard deductible off when I first bought my house ($200,000 mortgage, $250,000 house) I saved a whopping $800 a year. I spent far more than that on maintenance and repairs every single year. And that was the first year, the number goes down after that. Eventually I just ended up taking the standard deductible and that's before Trump boosted that way up. I haven't looked but I bet a reasonably priced house never saves you any money in taxes now.

The only time the mortgage deductible makes a big difference is if you buy a mansion or your house is really expensive. So basically its a tax break for wealthy people.

Since the standard deduction for anyone married is $24,400 or something like that - it is incredibly hard outside of people in mansions on ocean-front properties (or being single with half the standard deduction) to itemize on your tax returns.

Even with $10k in property taxes, I won't even break $15k in mortgage interest for it to have any benefit.... And that's with me having a mortgage on a $450k+ house.
 

ponyo

Lifer
Feb 14, 2002
19,688
2,810
126
The only time the mortgage deductible makes a big difference is if you buy a mansion or your house is really expensive. So basically its a tax break for wealthy people.
The rich people I know pay cash for their home purchases. They don't finance.
 
Nov 8, 2012
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The rich people I know pay cash for their home purchases. They don't finance.

According to sources, it's roughly half and half of rich people if they choose to pay cash or mortgage.


Any rich person worth a shit should be mortgaging at these rates - because if you're smart enough to be rich you would understand:
1) The tax benefits and be able to calculate that in to your intereest costs.
2) Understand that the market will overall make much better returns than a 3% interest.

 

ultimatebob

Lifer
Jul 1, 2001
25,134
2,446
126
I think that my parents paid $40,000 for their house back in the late 1970's. That house is worth over $200,000 today, with only minimal improvements made to it over the past 50 years.

If I had the choice of a $36,000 mortgage with 8% interest vs. a $180,000 mortgage with 4.5% interest, I know what I would choose.
 

dullard

Elite Member
May 21, 2001
25,479
3,976
126
Since the standard deduction for anyone married is $24,400 or something like that - it is incredibly hard outside of people in mansions on ocean-front properties (or being single with half the standard deduction) to itemize on your tax returns.

Even with $10k in property taxes, I won't even break $15k in mortgage interest for it to have any benefit.... And that's with me having a mortgage on a $450k+ house.
You are correct that it is much harder to itemize now after the tax changes.

But, it is not impossible. Lets limit the discussion to well-off families ($24,400 standard deduction and already have $10k max in state + local taxes). Thus the other itemized deductions need to be at least $14,400/year to make itemizing worthwhile.

1) Even at today's ~3% mortgage rates, it just takes a $500k mortgage to reach that. There are lots of places where you might need at least a $500k mortgage to get a house and it still might not be an ocean-front mansion. Think LA, New York, San Diego, San Francisco, Seattle, Boston. It is almost true in Washington DC, Portland, and Denver.

2) Donations. A two earner professional family or similar (more than 5% of all households) tithing 10% a year can hit that pretty easily. The top 1% of families only needs to donate a nominal 3% of their income to reach that level.

3) Smart Donations. That same top 5% household, can donate 3.33% of their income every year, or 10% once every three years. Just take the standard deduction twice in a row, then lump your donations together and reap the itemized deduction limit. It really isn't that hard to donate an average of 3.33%. Of course, if you also have a mortgage, then this number plunges.
 
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PowerEngineer

Diamond Member
Oct 22, 2001
3,566
736
136
While it certainly is possible to collect enough deductions to exceed the new higher limits, the additional tax break is only based on the amount that is above the standard limit. So it seems to me that higher standard deduction does undercut the tax value of all itemizable tax deductions. Or so it seems to me...
 

dullard

Elite Member
May 21, 2001
25,479
3,976
126
While it certainly is possible to collect enough deductions to exceed the new higher limits, the additional tax break is only based on the amount that is above the standard limit. So it seems to me that higher standard deduction does undercut the tax value of all itemizable tax deductions. Or so it seems to me...
You are correct, it is certainly undercut. But it is not entirely undercut.

Suppose you were at the $10k cap for tax deductions and you donate $6k/year. You could then take three standard deductions in a row of $24,800 each (I'm ignoring inflation here). Or, you could lump your donations into one year, take two $24,800 standard deductions and one $28,000 standard deduction. The difference is $3200 more deducted. Since that family is probably in the 22 or 24% federal tax bracket, plus another ~6% state tax bracket, you are at a ~$960 savings.

I'd gladly move donation dates around to save $960 in taxes.

True, this only applies to people in the upper income levels, but it does apply to a large swath of ATOT posters who tend to be engineers, programmers, IT, or similar higher paid professions.
 
Nov 8, 2012
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You are correct, it is certainly undercut. But it is not entirely undercut.

Suppose you were at the $10k cap for tax deductions and you donate $6k/year. You could then take three standard deductions in a row of $24,800 each (I'm ignoring inflation here). Or, you could lump your donations into one year, take two $24,800 standard deductions and one $28,000 standard deduction. The difference is $3200 more deducted. Since that family is probably in the ~24% federal tax bracket, plus another ~6% state tax bracket, you are at a $960 savings.

I'd gladly move donation dates around to save $960 in taxes.

lol now if only your average American could afford to donate $6k/year, let alone $18k.

Yeah itemizing is just not something that 90% of this country can do... .and the majority that can are going to based on overpaying in mortgage interest.


Anyhow - one thing to note as far as tax deductions (since were on that topic) is the newly passed CARES act (stimulus bill earlier this year) now allows you to make a $300 deduction to charity/donations REGARDLESS of itemizing or not. Good info for people to know.

See:

.
 

dullard

Elite Member
May 21, 2001
25,479
3,976
126

highland145

Lifer
Oct 12, 2009
43,936
6,310
136
I started doubling contributions in 2017, nothing in 18, doubled in 19, nothing in 20 for just this reason. The wife wasn't happy because non profits count on donations (she runs one). I told her I donated double in 17 so they should have banked that? My logic vs her feels... I kind of like the recliner.
 

brianmanahan

Lifer
Sep 2, 2006
24,419
5,852
136
i quit doing donations when they doubled the standard deductible and i couldn't itemize them anymore

finally made peace with the fact that i am a selfish piece of trash
 
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brianmanahan

Lifer
Sep 2, 2006
24,419
5,852
136

i thought so at first, but after feeling no remorse for a couple years i realized i am a heartless piece of crap

well i guess i still give a random couple hundo to food banks and hurricanes and stuff like that a couple times a year

and there is that 10$ i throw to wikipedia every now and then to get rid of their pleading

oh and there was that dude and his wife whose meal i paid for at subway this winter when he asked. next thing you know he's triple-meating those freaking footlongs and adding chips and brownies and large drinks! ended up leaving me with 2$ left on my 30$ subway gift card lol

Orphanages and soup kitchens, you could volunteer.

i thought they got rid of those things in the 80s

plus, corona
 
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brianmanahan

Lifer
Sep 2, 2006
24,419
5,852
136

oh of that i am very much aware

the biggest loser i know greets me every morning when i look in the mirror

and as for excuses, i already have the headstone quote picked out:

Code:
i have seen the moment of my greatness flicker,
and i have seen the eternal footman hold my coat, and snicker,
and in short, i was afraid.
 
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PowerEngineer

Diamond Member
Oct 22, 2001
3,566
736
136
You are correct, it is certainly undercut. But it is not entirely undercut.

Suppose you were at the $10k cap for tax deductions and you donate $6k/year. You could then take three standard deductions in a row of $24,800 each (I'm ignoring inflation here). Or, you could lump your donations into one year, take two $24,800 standard deductions and one $28,000 standard deduction. The difference is $3200 more deducted. Since that family is probably in the 22 or 24% federal tax bracket, plus another ~6% state tax bracket, you are at a ~$960 savings.

I'd gladly move donation dates around to save $960 in taxes.

True, this only applies to people in the upper income levels, but it does apply to a large swath of ATOT posters who tend to be engineers, programmers, IT, or similar higher paid professions.

No one can argue with your numbers, but the tax savings tied to your deductions are only a small fraction of what they would have been under the old $13,000 standard deduction. Using your example, the amount greater than the standard deduction would be $3,000/year ($16K-$13K) and $9,000 over three years. That comes to a tax reduction of around $2,700.

Now I am NOT saying that the actual taxes paid would be less, as I suspect that for most filers the higher standard deduction helps more that the loss of deductions hurts. What I am saying is that the tax reducing value of deductions has been substantially (but not always entirely) undercut.

FWIW, people who are interested in your strategy for concentrating deductions into fewer tax years should look into donor-advised funds for charitable giving. You get the tax deduction in the year you move assets into the fund and can disburse the money to charities over a period of years. As I understand it, there can also be capital gains benefits.
 

snoopy7548

Diamond Member
Jan 1, 2005
8,126
5,151
146
The trick is to adjust your withholdings so that you get a huge refund - free money! The suckers are the ones who get almost nothing back.
 

brianmanahan

Lifer
Sep 2, 2006
24,419
5,852
136
The trick is to adjust your withholdings so that you get a huge refund - free money! The suckers are the ones who get almost nothing back.

then use that refund for a mortgage payment!

CzpJn3j.gif
 
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