"GETTING RICH IS SIMPLER THAN YOU THINK"-MSN

[GBRulz]

I disagree about the 20% scenario. I think more homes go into foreclosures because banks will pre-approve you for a loan much higher than you can probably afford. People see that they can have this huge house, low monthly payments for a few years, etc but they fail to think about a rainy day. I was shocked to hear that my bank would approve me for 180k loan. I'm like "um, I'd like to have a life outside of paying for my home"

Would I like to live in a more expensive home? Sure, why not? But I am single and if I lost my job (which is exactly what happened two months after I bought my house by the way) would I still be able to afford those payments? had I bought a more expensive home, I would have had to sell it because of the job loss. Things like this are what you need to consider when buying a home.

So many people take advantage of the credit extended to them and that is where the foreclosures and getting in trouble takes place. Not because they take out a 30 year fixed loan and not put 20% down. Personally, I took the 30 but make higher payments most of the time. I hope to have my house paid off in about 12 more years. Each situation is different, I don't think this is a book written rule about what is right and wrong about what to put down on a house.

[Bretsky]

I disagree about the 20% scenario. I think more homes go into foreclosures because banks will pre-approve you for a loan much higher than you can probably afford. People see that they can have this huge house, low monthly payments for a few years, etc but they fail to think about a rainy day. I was shocked to hear that my bank would approve me for 180k loan. I'm like "um, I'd like to have a life outside of paying for my home"

Would I like to live in a more expensive home? Sure, why not? But I am single and if I lost my job (which is exactly what happened two months after I bought my house by the way) would I still be able to afford those payments? had I bought a more expensive home, I would have had to sell it because of the job loss. Things like this are what you need to consider when buying a home.

So many people take advantage of the credit extended to them and that is where the foreclosures and getting in trouble takes place. Not because they take out a 30 year fixed loan and not put 20% down. Personally, I took the 30 but make higher payments most of the time. I hope to have my house paid off in about 12 more years. Each situation is different, I don't think this is a book written rule about what is right and wrong about what to put down on a house.

Good points; right now the difference between a 30Yr and 15Yr Loan is only about .25% on the interest rate. Some actually prefer the 30 due to monthly flexibility and then just pay ahead.

You bring up another good point. Good credit customers can often get approved for more than what they should be buying for. And yo8u smartly realized, and hopefully were told to a point, that what you could get approved for and what you can afford might be two different things.

I have a hard time blaming the banks for this; we're given rules and when buyers come in looking for homes that are higher than they should pay I'm not convinced it's our job to talk them out if it. But we should discuss risk.

I do show people their total debt to income ratios and strongly suggest where people should be looking at in terms of price range, but that's as far as I go. If somebody does want to buy in a higher range than they should, if I don't get them approved they'll go to the local mortgage broker and get rippped off. At least I'm being honest and up front with them and treating them fairly.

My only point is some of the responsibility has to go back to the clients as well.

[packinpatland]

I'm too lazy to read all the previous posts. Has much been mentioned about good old 'sweat equitiy' in regards to home owning and selling?
We took out a 65K construction loan 23 years ago. At the time, it was a stretch. Today, with a few addtions and ALOT of sweat equity, our home could easily sell for over 650K.
My daughter and her new husband have done exactly the same thing, with only owning their home a few years, they saw a profit of over 100K.
We weren't afaid to live on plywood floors for awhile, or wash the dishes instead of having a machine do it...............it all paid off. It was work, but was worth it..

[Bretsky]

BUMP FOR OLD TIMES SAKES

SOMEBODY WANTED TO KNOW WHERE THE MONEY THREAD WENT; I"M SEARCHING AND FOUND THIS ONE

I'll find the other too