6 Mortgage Interest Deduction Myths

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Published: February 16, 2011
By: Dona DeZube
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Think losing the mortgage interest deduction would be no big deal? We bust six myths to show why the cost is bigger than you think.

Proposals floating on Capitol Hill to curb the mortgage interest deduction gloss over all the ways home owners, and even renters, would be hurt by the change. Let’s set the record straight.

Myth #1: The mortgage deduction is just for rich people.

The mortgage interest deduction helps mostly middle- and lower-income families.

65% of families who use it earn less than $100,000 per year.

91% earn less than $200,000 per year (that’s where most economists draw the line between rich and middle-class).

Only 9% earn more than $200,000 per year.

This myth may have arisen because of a related fact: If you buy a house, you’re much more likely to accumulate wealth by the end of your life. Home owners have an average net worth of $200,000, while the average renter’s net worth is $5,000, according to the Federal Reserve’s Survey of Consumer Finances.

Next: Myth #2: Switching to a 12% mortgage interest credit would be a wash for most.

Dona DeZube

has been writing about real estate for more than two decades. She lives in a suburban Baltimore Midcentury modest home on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound.

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