How would somebody buy a house and pay off their debts?

Question

I saw this ad and I'm wondering if it's possible, or likely:

Buy a house and pay off your debts!
You can buy a house and pay off your debts in your real estate purchase.
If you didnt have your car payment or credit cards bills, you could afford a house payment and get a big paycheck at tax time.

Thanks!

Answer 1

Don't use them because they are not being honest. What they are saying is that you can buy a house and include all of your debt. What you are doing is turning your 5 year car payment/credit card payment into a 30 year debt. Go to the website below and plug in the numbers for a 30 year fixed mortagage for a $300,000 house at 7% and look at the amorization schedule for the amount of interest that you will pay. Then do $305,000 to pay off your car loan. You will see that you will spend a hell of a lot more money on interest.

The big paycheck at tax time is the tax advantage of owning a home. This is misleading also because what the "advantage" is that you can write off the amount of interest that you pay on your mortgage. But, you only get the amount of your tax bracket. So, if you paid $20,000.00 in mortgage interest then you will get back 15% ($3,000) of that interest if you are in the 15% tax bracket. This means that you only recoup 15% of the extra interest that you spent for adding your car loan to the amount.

Answer 2

Sounds like some kind of scam or fast talking.

They could be talking about rolling all your credit card and other debts into the house payment, which is a very bad idea.

Answer 3

In other words, borrow against the equity in your home, usually at lower rates, pay off other debts at higher rates, then hope you can handle 2 mortgages for many years to come.

Answer 4

They're probably talking about writing off mortgage interest on income taxes. Very poor attempt at advertising. Stay away from them.

Answer 5

It's a scam. Do it and you'll find yourself further in debt.