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Reply to "Is there going to be panic selling?"
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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Can’t imagine having this man for a neighbor. [b]But on topic, I think people will cling to their 2-3% mortgages with everything they have.[/b] Some people who overextended in the past couple years with crazy rates and crazy prices might walk away but most people have tons of equity and low rates.[/quote] Why do people keep saying this?? Cash now pays 4.2% and you have to pay taxes on that interest. The typical DC-area homeowner is at least in the 24% tax bracket. Tack on 8% for Maryland and you’re now at 32%, which reduces your after-tax return on cash to 2.8%. This means that a 3% mortgage is NOT a “cling on for dear life” asset. Paying it off is probably the highest risk-free return out there for most people.[/quote] They are saying that because once you sell a house, you lose that rate and have to either rent or pay a much higher rate.[/quote]
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