Burning the mortgage in Missouri
Yesterday on the podcast we talked about how the Great Depression gave us the long-term mortgage. In the years following, thanks to major government intervention, we became a nation of homeowners. There are still people who make it all the way through a 30 years and burn the mortgage but the numbers are declining. I've been struggling to figure out whether that's good or bad.
Homeownership is a kind of forced savings. It ties people their neighborhoods and encourages them to invest in the local community. That seems good. Then again economics tells us mobility is a good thing. Which makes long-term homeownership seem bad.
Several of you pointed out that, thanks to that government intervention, we are discouraged from paying off that 30 year loan. Here's Ken Jackson, the history professor from yesterday's podcast:
Over the past half century in the United States, mortgage debt has generally been a good thing for families. And mortgage interest is usually at a lower rate that credit card debt or general purpose loans. Additionally, the interest on a mortgage has been fully tax-deductible from gross income, a situation that does not obtain in most other advanced countries. In the past decade, however, the introduction of the alternative minimum tax has made mortgage deductions less attractive for upper income earners.
What do you all think? Should Americans have easy access to long-term mortgage financing? Is that always good thing?