Subprime

Finance allah shmoop shmoop What is a mortgage Well people

a mortgage is just dead it's alone but one with

special tax treatment For most people simply put Any interest

you pay on a mortgage to buy a home is

tax deductible Morty morton's inputs down a hundred thousand bucks

to buy a home that costs four hundred big ones

his mortgages three hundred grand at five percent interest per

year So that's fifteen thousand dollars a year he pays

to rent the money from the bank which he uses

to buy his dream home with the loop de loop

waterslide Morty earns one hundred grand a year and pays

tax on his last fifteen thousand of earnings soas faras

The irs is concerned since morty can deduct his fifteen

thousand dollars in interest against his earnings he does not

in fact earn taxable wages of one hundred grand annually

Instead he earns taxable wages of eighty five thousand dollars

a year Essentially with government is doing is sharing in

some of the cost of renting the money Taub i'm

ortiz home well why would the u s government be

so charitable Well because home ownership has been integral part

of the american dream since the u s of a

i po'ed in seventeen seventy six easy access to mortgages

and then home buying can be a hugely beneficial asset

In the vast majority of cases homes create family stability

a store of wealth and tax dollars for local schools

in the form of real estate taxes So don't feel

bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello