[Polybius]

I guess what I'm trying to understand from this thread is what is the special danger of owning real estate.

See Post 53.

There is no danger in owning real estate if you bought at a price that offered good value with financing terms you can afford.

The problem is buying at today's current prices that are being artificially inflated by buyers that are being offered large and very risky interest-only ARM loans.

Let's assume that Tony the Loan Shark has just loaned me $1 million that I can never hope to repay and I am offering $800,000 to buy the three bedroom house that you want to buy.

Rather than borrowing $1 million from Tony the Loan Shark yourself and outbidding me with a bid of $900,000, it would be better for you to wait until Tony the Loan Shark has me sleeping with the fishes, no fools are offering $900,000 for such a house and the price has dropped to a level you can afford with a fixed rated conventional mortgage.

If you just say "No" to ridiculous prices that you can only afford with risky mortgages, you have no danger.

[MrNatural]

Re: Your post 87

That all makes sense. Some of the other posters were making it sound like anyone buying real estate was just throwing their money away. Thanks.

[goldstategop]

ARMs are fine if you'll live in a house less than 10 years. If you won't live it in long enough to enjoy it, its better to just pay the interest until you sell. When you do, it should be enough to pay off the mortgage balance thanks to real estate appreciation. On the other hand, of you plan to stay in the home the rest of your life, a conventional fixed rate mortgage is definitely the route to take. There is no single mortgage product any more since every home buyer's needs are different.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus