Alienation Clause
Albert Camus' little-known Christmas novel, which flopped when it was released in November of 1947 and prompted Jean-Paul Satre to remark, "I didn't like the part where Dasher committed suicide. Frankly, I prefer White Christmas."
Ok, ok...actually, the alienation clause is part of a mortgage agreement. It states that the person holding the mortgage can't transfer the mortgaged property to someone else until the mortgage is paid off. And this is a Thing when mortgage rates have risen over a long period of time.
That is, Joe Bob Billy took out a $300,000 mortgage with a cheap 5% 30-year fixed-rate loan. Today's mortgage rates, seven years after Bob took out his loan, are 7.5%. Normally, the buyer of that home would want to assume the remaining $237,982 on Joe Bob's loan and then get a second (or contiguous) mortgage to cover the rest, albeit at those higher 7.5% interest rates. An Alienation Clause disallows that option.
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Finance allah shmoop shmoop What is a mortgage Well people
a mortgage is just dead it's alone but one with
special tax treatment For most people simply put Any interest
you pay on a mortgage to buy a home is
tax deductible Morty morton's inputs down a hundred thousand bucks
to buy a home that costs four hundred big ones
his mortgages three hundred grand at five percent interest per
year So that's fifteen thousand dollars a year he pays
to rent the money from the bank which he uses
to buy his dream home with the loop de loop
waterslide Morty earns one hundred grand a year and pays
tax on his last fifteen thousand of earnings soas faras
The irs is concerned since morty can deduct his fifteen
thousand dollars in interest against his earnings he does not
in fact earn taxable wages of one hundred grand annually
Instead he earns taxable wages of eighty five thousand dollars
a year Essentially with government is doing is sharing in
some of the cost of renting the money Taub i'm
ortiz home well why would the u s government be
so charitable Well because home ownership has been integral part
of the american dream since the u s of a
i po'ed in seventeen seventy six easy access to mortgages
and then home buying can be a hugely beneficial asset
In the vast majority of cases homes create family stability
a store of wealth and tax dollars for local schools
in the form of real estate taxes So don't feel
bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello