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" provide some collateral" Is that really necessary with a 25-50% down payment? A 50% down payment in many places in the United States, would mean foregoing h

" provide some collateral" Is that really necessary with a 25-50% down payment? A 50% down payment in many places in the United States, would mean foregoing home ownership until one was in their 30s. Depending on the market the person is in, (and, of course, the current interest rate, which right now is at historic lows) - the person would then end up spending more money on rent than they would have by purchasing a house and instead paying mortgage+upkeep+insurance+taxes.

pc86 11y ago
> > provide some collateral > Is that really necessary with a 25-50% down payment? It's not necessary at all. First of all, a car is not going to be adequate collateral for half (or three quarters, or more) of a house. If it is, you are spending way too much on your car. And yes, 50% down payment is untenable for the majority of people in the US, even those with upper middle class incomes. Hell, when my wife and I bought our first house we used the FHA and only had to make a 3.5% down payment. In our low cost of living area that meant our down payment was less than what I paid for my first car (which was a decade old when I bought it). No collateral was necessary for that, either.
maxerickson 11y ago
It's a little difficult to say exactly where housing prices would be without government incentivized 30 year mortgages. (there are several incentives, tax deductions, cheap loan insurance, etc) In a decent housing market, one of the things people consider when choosing a house/making an offer is how large of a payment they can make each month. Feed that payment into a 15 year loan on 60% of the purchase and you end up with a much different level of buying power than if you feed that payment into a 30 year loan on 95% of the purchase (and thus one way of thinking says that you can expect higher prices in general when 30 year loans on most of the principle are easy to get).

pc86 11y ago

> > provide some collateral > Is that really necessary with a 25-50% down payment? It's not necessary at all. First of all, a car is not going to be adequate collateral for half (or three quarters, or more) of a house. If it is, you are spending way too much on your car. And yes, 50% down payment is untenable for the majority of people in the US, even those with upper middle class incomes. Hell, when my wife and I bought our first house we used the FHA and only had to make a 3.5% down payment. In our low cost of living area that meant our down payment was less than what I paid for my first car (which was a decade old when I bought it). No collateral was necessary for that, either.

maxerickson 11y ago

It's a little difficult to say exactly where housing prices would be without government incentivized 30 year mortgages. (there are several incentives, tax deductions, cheap loan insurance, etc) In a decent housing market, one of the things people consider when choosing a house/making an offer is how large of a payment they can make each month. Feed that payment into a 15 year loan on 60% of the purchase and you end up with a much different level of buying power than if you feed that payment into a 30 year loan on 95% of the purchase (and thus one way of thinking says that you can expect higher prices in general when 30 year loans on most of the principle are easy to get).