Bretsky,
Allow me to explain.... I give you an "A" for effort, but a "C" for execution!
I do believe that
EVERY homeowner should put down 20% on a home, and furthermore should carry
NO GREATER than a 15 year FIXED rate loan.
Failure to do that ignores RISK and that risk will bite you in the ass when you least expect it. Timing has the "benefit" of making it appear that risk doesn't exist. When Bretsky bought his home, the market was strong, rates were low, at historic lows and headed downward. Those items OFFSET the risk, more luck than plan, and so buying without 20% worked out well for him. He beat the risk. It doesn't always work out that way.
Recently, one of the biggest subprime mortgage lenders (New Century) went bankrupt because they had so many foreclosures that they couldn't service their own debt. Behind that bankruptcy are thousands of foreclosures of good people and good families
WHO BOUGHT SOMETHING THEY WERE NOT READY FOR, OR COULD NOT AFFORD. Everyone talks about their home being a "blessing" and the "best investment" they'll every make. Think it is true for those folks who are in foreclosure?
How many of those foreclosures were due to adjustable rate mortgages or high second mortgages? The vast majority of them, of that I am sure. These people believed the American dream was "HAVE IT NOW". You don't need to plan. You don't need to save. There is a loan that I can qualify for.... Therefore, I can afford the house. Then, life happens, and their lives are screwed for the next 10 years, OR LONGER.
Bretsky says he "learned" to save by owning a home, and furthermore that he "learned" the value of building wealth by buying a home. I'd disagree with that, on my belief that the "habits" were present before they bought the home, but weren't being executed. They didn't learn it so much as they began to do it when they bought the house.
Markets change almost overnight, and RISK changes right with it. You have to plan for the future when you make a decision of this magnitude. Thousands of families didn't plan, and as a result went through foreclosure and possibly bankruptcy too. Their dream became a nightmare. Bresky's dream became a blessing. Timing and luck. That's the majority of the difference.
Partial, I firmly believe if you don't have a 20% down payment, and cannot afford a 15 year fixed rate mortage - YOU CANNOT AFFORD THE HOUSE. It may appear that you can, but most likely you cannot. You might get lucky and buy in the right part of town, or in the right market, so that the risk doesn't hit you like a baseball in the forehead, but, if you've got my kind of luck....
A home is a blessing, don't make it a nightmare. Plan and learn to save outside homeownership. Improve your chances of success and minimize your risk.
Hear this very clearly -
THERE IS NOTHING IN THIS WORLD THAT YOU HAVE THAT I WANT IF I HAVE TO BORROW MONEY TO GET IT. NOTHING.