I never borrowed against my house since I bought it except for some improvements. I paid 80% market value at the time, then put a lot of work into it, and mostly cash out of pocket. My wife and I were working at the time and had not had a child, so we used our extra salary to make all the improvements to the foreclosed house and pay off our cars. We had a couple of windfalls and combined that with savings to create a very nice rainy day fund. We have debt on our house roughly equal to my annual salary (1:1 ratio) and that’s it. Two newer cars paid for. On top of that a very substantial rainy day fund. The retirement gets funded well too. There’s plenty of money for this because we don’t run up credit cards and borrow all our equity from the house like a lot of people we know.

A lot of our friends did things differently. Before they had kids, they bought the nicest house they could afford on the dual income. Now where are they? Well for one thing, they’re both working and putting their kids in daycare. My wife is able to stay home and raise our children the way WE want. She’s in a smaller house than our friends, but at least she’s in it all day and not in the office like most people we know. I amazes me how so many people put their material wants and status of having nice cars and big houses before the needs of their children. But hey, that’s just me and what do I know? Most of these friends also have no rainy day fund because their credit cards and big mortgage suck them dry every month leaving nothing behind.

Deb, you and I are probably considered old-fashioned. Who cares. I don’t lose sleep at night because I know that even if I lose my job tomorrow, I can live for a year on savings and even longer than that on ‘equity’. To me it’s about quality vs. quantity.

But if these spendthrifts didn’t drive up real estate prices with their easy cheap mortgages, maybe we’d be in a nicer house. Bush and Clinton want to reward them. But as long as the system keeps home prices artificially high, we’ll have to stay put.

I do agree with Chris (altho I admit I don’t particularly agree with his style) – 20% for a downpayment isn’t always indicative of being able to afford something. Although I do think it’s wise to come up with a downpayment and to avoid PMI.

I can’t count how many HGTV shows I’ve seen that feature a young couple with car payments and toy payments and a pile of debt, they have no money for a down payment, and they’re house shopping. But a little starter house just won’t do….it’s not big enough, it’s not nice enough…or it’s just not enough! I shake my head as they jump up & down at closing, and I wonder `where are they now, in foreclosure?’. Hey HGTV, how about a `where are they now’ episode?!

We (the average U.S. consumer) have been living on the *promise* of a pay check in this country for far too long. We’ve been living beyond our means & ignoring the warning signs. We refuse to educate ourselves financially, and credit cards allow us to blur the line between a need and a want. If trouble hits, no problem! We expect our Govt will come in and bail us out.

And by WE, I mean the Royal WE. Personally, I have no debt outside of my mortgage, have a healthy retirement plan, always keep more than enough cash available for emergencies, and have just purchased my first real estate investment, a SF home. I choose to do without that big new t.v. and a shiny new car. I’d rather sleep well at night, thank you.

It’s a choice, and collectively, our choices have been very foolish. It angers me to see our Government enable those who make these choices (but hey, what did our Govt do during the 9/11 attack? Urge us to go out and shop. Heck, Condoleeza went shoe shopping during Katrina). And it really angers me to see these brokers and mortgage companies walk away from a disaster they helped to create.

This country continues to try to stave off the inevitable – a serious market correction. What we really need is a good tree shaking to let the nuts fall to the ground.

I am conservative but I lost faith in Bush when he proposed amnesty for illegals (he tried to say it wasn’t, but we all know it was) and now a bailout for stupid mortgagees. If he were a real conservative he would not allow this moral hazard on either front to continue by rewarding law breakers and reckless financial decisions.

Milton Friedman must be turning over in his grave.

Money down has nothing to do with being able to afford something, even a house. Pre-2000 there were plenty of ways to buy a home with no money down, you obviously weren’t resourceful enough to find one.

I’ve never lived in appt, never will, and I decided after college to never rent again. Rent for a house the size of mine is a hundred dollars less than the mortgage payment and taxes and interest is deductible. I have too many toys, I play the drums, and I like working on houses so having my own place was the only option. I also don’t have a car payment, don’t have kids or a wife to suck money out of me, so the only thing that would stop me from making my payment every month would be an unforseen catastrophic financial emergency (like my Rock and Republic jeans getting stained). I went to college so my odds against being unemployable are about a billion to one. Worst case scenario, I’d just move out and rent it out for the mortgage payment, probably to a guy like you (working hard to save that 20%).

Glad I voted for Bush, first he kicks A$$ in the middle east then kicks A$$ in our mortgage industry.

As for the ARM crowd who threw caution to the wind and had no plan for what they would do when the rates reset, I have little sympathy. I’m hoping I can gamble on some of their foreclosures. Of course that will be less likely if Bush and Clinton keep them in their houses by force of government.

Rent in a house in Portland for a house like mine (3bed/2bath/2car) is easily 1200-1300, which just so happens to equal my mortgage payment. So what did I do when i needed a place? I bought, nothing down, no ‘application fee’, deposit, cleaning fee, etc.

I’m guessing you wouldn’t be whining and complaining had I rented the house, made the same payment, and made some landlord wealthy.

I can afford it, 20% down has nothing to do with it, I took a risk, I bet the market would still go up, I’d make more money down the road, and I wouldn’t have unforseen expenses.

Well I only bet on sure things. With a college degree I’ll never be unemployed and there’s always someone looking for a house to rent (people like you saving that 20%) if things went bad and I couldn’t afford to live there anymore). Plus taxes and interest is tax deductible, I’m actually paying less for a house than a rental.

Oh yeah and I voted for Bush, looks like it’ll pay off in more ways than it already has…

If you didn’t have 20% down at the time then you could not afford the house.

I am happy you own a home that has appreciated, but in ancient times (pre-2000), you needed 20% down to get a mortgage. It’s only because the mortgage industry decided to throw prudence to the wind that you have that house. Be grateful, but don’t expect the honest guys like me to subsidize it.