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Don’t Blame Taxes for Your Problems « from the gut

So I’m reading this article by David Peterson in the Minneapolis Star Tribune this morning. (No link, they take down articles after two weeks anyway.) The article discusses how housing is accounting for larger percent of people’s take-home pay. And it starts out discussing how peoples’ mortgages have gone up. An example was $600 to $1100 per month.

I’m no finance major, but I’m pretty sure that mortgages don’t magically go up. When you cash out one mortgage and take on another, then the price changes. But this decision to refinance is one hundred percent on the person making the choice. You reap what you sow. Free money is never free.

The article goes on to discuss how this phenomenon has not hit the rental market as badly. No surprise here. Renters can’t make these stupid financial decisions. If your landlord refinances and doubles your rent, you move.

The real kicker though, is this anecdote.

Homeowners say many factors can lead to the same end point: a bigger housing bill than they can comfortably handle.

D’Heilly, who takes home about $2,000 a month from her job as commercial engineering services coordinator at the Toro Co., in Bloomington, pays more than half that for a longtime family home.

Her own refinance to remodel pushed costs higher. But the main thing she blames is surging home values in the city, which push up the value of her home on paper, and therefore her taxes, which have risen three times faster than her paycheck.

“It seems like everything goes up and up and up, except your pay,” she said.

Let me get this straight, so you refinanced your home, which increased your mortgage. Then you remodelled your house, which led to a reassessment and then increased your mortgage. (Assuming your taxes are paid from an escrow account.) But the real problem here is your neighbor’s home values, which are increasing your tax burden. You have got to be kidding?!

Now, I appreciate the article. I think it’s a discussion that is becoming increasingly relevant. I also realize that as a journalist, your job is to report and not debate. But how can you let this assertion go by without a response? How about a little counter-quote here? How about a little basic accounting 101 about how the $10 more in taxes pale in comparison to the hundreds extra you are paying for your refinance. How about correcting misinformation?

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