Thread: Debt for first-time buyers
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Old 08-04-2007, 01:19 PM
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Reading between the lines, it looks like people are not borrowing wisely, and are perhaps trying to buy more house than they really can afford. This has been a problem in California, especially when people see home prices rise rapidly. They think they can buy a house today, and watch its value soar even more by tomorrow. Unfortunately for them, prices & sales soon level off or dip, and they can neither afford nor sell their house.

There are also a lot of financing schemes which the novice really should be wary of getting into. Recently, I've read about "interest only" loans (in Calif.), where you pay only the interest, and the principal is due in one lump sum after a few years. Lots of people are getting caught when they try to refinance or sell, but the value of their house has decreased to where they can't pay off the loan. A straightforward fixed mortgage is the most reliable and understandable, IMHO.

I advise folks to buy a house to be a home first and investment second. In the long run, you're likely to gain, but making rapid profits is iffy.
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