Qualified Mortgage

"Qualified" for tax deductability.

Huh? A mortgage is just a loan. So why wouldn't any loan (now up to $500,000 max) be qualified as a mortgage? Like...couldn't you just borrow that dough from Rich Uncle Larry?

Well...no. In fact, mortgages carry all kinds of very specific lending language for a variety of reasons, such that in order to receive the mortgage interest credit or tax deduction by dint of paying that mortgage interest, takers of mortgages have to buy them through banks.

So...doesn't this seem like a scam? Like...the government is monopolizing the mortgage industry in forcing you, the home buyer, to essentially buy through them, or at least under their set of rubrics. Well, in fact, it's actually a pretty good idea when you think of all the things that could go wrong, were anyone able to lend anyone money for mortgages.

Those issues revolve around what happens when things go...awry. Like...it's 2009 and nephew Bobby lost his job at the enema clinic. Now he can't make his mortgage payments. And, well, Uncle Larry isn't so rich any more. He wants those payments. Needs them. So now Uncle Larry has to kick Bobby and his wife and their little enemates out of the home, with a sheriff dragging the bags and tubing behind them.

Painful social situation. Bad headlnes. Nobody wants this. So in forcing mortgages to be run through banks, there is a third neutral party doing the kicking-out if need be, and there is a higher level of scrutiny in granting mortgages in the first place. That is, banks can just say no to granting a mortgage in the first place. Supposing the buyer doesn't qualify because they dont have enough money down, or don't earn enough, or have bad credit or whatever...if the bank just says no, then the family doesn't upgrade homes...or they just keep living in the apartment or tool shed they've been living in. No sheriff involved, no tears. Well, some tears.