LOL the political reported rate is what the .gov is willing to provide in COLA increases. It has nothing to do with actual costs. You're budgeting based on made up numbers provided for someone elses "pay" rate increases.
Look at say... gas prices. Double in a decade. Thats about 7% per year. Or the price of food, or medical insurance, or tuition, or price of cars, etc. Think of what real people actually spend money on.
You can get better numbers from shadowstats. Somewhere toward the low end of 6% to 10% is about right. We'll call it 7% long term average.
The problem with 7% annual inflation rates is very few people can maintain those pay increases, every year, for an entire 30 year mortgage... So eventually you end up house poor.
Lets say J6P gets a 3% pay raise but the cost of everything else increased by 7%, for a generation or so. That means the money left over after food, car, etc aka the rent either directly for land or indirectly for money to buy land, will drop by about 4% per year. For awhile you can mask that by lowering interest rates, but once you reach "basically zero" like now, problems develop.
Finally the mortgage interest deduction doesn't work like that. If you pay more interest to the bank than the standard deduction fraction then you don't have to pay income tax on the fraction above that. Basically you need low income, high interest payments, and then all you save is taxes on the portion above the standard level. You're still out the same money, just not out the income tax on a small sliver of the total interest over a certain limit. I've paid enough of my mortgage off that I no longer get a mortgage interest deduction. Oh, I could file it anyway, but I'd have to pay more in taxes than just taking the std deduction. Eventually you reach AMT range and then things get weird.
If you want to rely on some random website for your financial data, that is certainly your right, but I don't think we could have much of a conversation about it.
The problem with 7% annual inflation rates is very few people can maintain those pay increases, every year, for an entire 30 year mortgage... So eventually you end up house poor.
Actually you end up inflation poor, not house poor. Your house payment stays mostly fixed. In your scenario of much higher inflation than reported, rents are also likely going up. In such a case the renter will be worse off than the home owner.
LOL the political reported rate is what the .gov is willing to provide in COLA increases. It has nothing to do with actual costs. You're budgeting based on made up numbers provided for someone elses "pay" rate increases.
Look at say... gas prices. Double in a decade. Thats about 7% per year. Or the price of food, or medical insurance, or tuition, or price of cars, etc. Think of what real people actually spend money on.
You can get better numbers from shadowstats. Somewhere toward the low end of 6% to 10% is about right. We'll call it 7% long term average.
The problem with 7% annual inflation rates is very few people can maintain those pay increases, every year, for an entire 30 year mortgage... So eventually you end up house poor.
Lets say J6P gets a 3% pay raise but the cost of everything else increased by 7%, for a generation or so. That means the money left over after food, car, etc aka the rent either directly for land or indirectly for money to buy land, will drop by about 4% per year. For awhile you can mask that by lowering interest rates, but once you reach "basically zero" like now, problems develop.
Finally the mortgage interest deduction doesn't work like that. If you pay more interest to the bank than the standard deduction fraction then you don't have to pay income tax on the fraction above that. Basically you need low income, high interest payments, and then all you save is taxes on the portion above the standard level. You're still out the same money, just not out the income tax on a small sliver of the total interest over a certain limit. I've paid enough of my mortgage off that I no longer get a mortgage interest deduction. Oh, I could file it anyway, but I'd have to pay more in taxes than just taking the std deduction. Eventually you reach AMT range and then things get weird.