"What's wrong with buying a smaller (a.k.a starter) home first and building up equity to help pay for a larger home down the road? "
That's exactly the question I asked zander ;>
Do people have zero concept of money now-a-days? But look, I got this cool house <b>right now</b> so who cares that I'll still be paying a mortgage when I'm in my 60s.... :P
<blockquote><cite>DeanK</cite>eee gads... 0 down and a 40 year mortage?????.. its "deals" like that, that killed the US market...</blockquote>
Actually. It was low introductory rates and the lack of standards when lending money that killed the US.
40+ year mortgages have been around for decades in Europe and are actually good for people hoping to get into a house while keeping their payment low. That said, most people only keep a 40 year ammortization for the first few years and convert it to a 20 year mortgage once they can afford the larger monthly payment.
I agree with StBPegger. I guess it comes down largely to a matter of personal taste...I don't like the idea of being stretched to the max to make my mortgage payments.
<blockquote><cite>Posted By: cancelbot</cite>I agree with StBPegger. I guess it comes down largely to a matter of personal taste...I don't like the idea of being stretched to the max to make my mortgage payments.</blockquote>
For many in Winnipeg (and other cities) a 40 year mortgage is the only way to get into a house and keep the payments low enough to prevent being house poor.
The nice thing about once you buy is that your purchase price doesn't go up and when you start making more money (or having less expenses) you can change your amortization to a shorter mortgage. Unlike rent which can climb at the rate of inflation (or demand).
However buying a house that is too big or expensive is no way to live. You have to be reasonable. Usually I recommend to friends just getting into the market to only take a mortgage no bigger than 70% of what the bank is willing to give you.
The problem is that some (most?) people probably won't flip - they see if as free money. I view it the same way people think credit cards are free money and rack near the limit, only paying minimum balance. Sheer insanity.