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Home Finance Mortgages Government, Loans, and Interest

Government, Loans, and Interest

If your parents bug you about getting a good job, settling down, and giving them grandkids someday, you're going to love the U.S. government. They also want you doing stuff—like buying a house.

When Americans buy houses, it's great for the economy. Lots of people buying means that there's more interest in building new homes. That means more construction site jobs; more jobs at the factory making, uh, house parts; and more jobs for interior designers with neurotic, tiny dogs. More jobs means more people are out there spending, which means more jobs everywhere else.

Money flows and everyone's smiling.

People buying houses also means more stability overall. Homeowners might stay in one spot, have kids (also great for the economy—do you have any idea how much diapers cost?), and pay property taxes.

To keep that cash flowing and to help Americans buy houses, the government has a few ways to help out:

(1) They created a supermarket for loans. Fannie Mae and Freddie Mac are government clearinghouses that make it easier for you to get your first home (and your first mortgage). Having trouble getting your first house? There are programs to help you out. 

(2) They create tax incentives for homeowners. Want to rent? Too bad. You're going to end up paying more in income tax (and your landlord will use your rent money to cover their property taxes). If you carry a home loan, though, the interest and property taxes are tax deductible. So your taxes are helping the government subsidize homeownership. As long as your home loan is $1.1 million or less (which holy moly we hope it is), your interest rate is deductible.

You might want to stick it to The Man and keep renting, but the government is trying to sweeten the pot and get you into a house of your own. Since your taxes are keeping parts of the government running, you might just want to cash in by taking advantage someday.

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