Secondly, but most importantly, such a deduction shouldn't be the determining factor when purchasing a house. If you need such a deduction to afford the house, then the house costs too much.
“Secondly, but most importantly, such a deduction shouldn’t be the determining factor when purchasing a house. If you need such a deduction to afford the house, then the house costs too much.”
Let’s assume a “worst-case scenario” — in this case, that the deduction for mortgage interest is eliminated in its entirety.
How will this impact the housing market?
I sense home prices will be forced downward, but by how much?
Will it affect interest rates for mortgages?
Sound advice, we just gave the same advice to our kid who's buying his first house. Other advice was to make sure the payment wasn't more than 1/4 of his income (not counting his wife's income.) Those were the old "rules" and they served us well. Today though rates are so ridiculously low and house prices so depressed, that his payment is about what ours was when we bought a house 25 years ago...but his salary is at least twice of what my husband's was when we bought our first. Who'd have "thunk" it.