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by Rob Chrisman
Thoughts on Keeping the 30-yr Mortgage; Tax Implications of Cancelled Mortgage Debt

There continues to be a debate about whether or not 30-yr mortgages/liens are a good idea or not. The MBA's president - Dave Stevens - weighed in on the argument last week.

"On the one hand it could be argued that the fully pre payable 30 year fixed rate loan was not a necessity in looking back historically. There is some truth to that - to be clear - mortgage interest rates have been on a steady decline for over three decades since their peak in 1980. While clearly home-owner preference for the 30 year mortgage has been high, borrowers would have clearly benefited from an adjustable rate product that would have adjusted naturally downward over the past three decades.

In hindsight, borrowers would have avoided all of the expense and time associated with refinancing as mortgage interest rates essentially dropped from their peak of 18% down to about 3.5% at bottom a few short weeks ago. Yes, there were a few spikes along the way, but these were very short lived and would have been more than offset by the eventual rate declines that followed these infrequent corrections. So yes, to those that that argue this point, they are correct - in hindsight. And hindsight is always perfect."

...read more at Mortgage News Daily

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