[RockinRight]

ARMs are evil for your primary dwelling. Less than 10% down is asking for a financial bloody nose. Paying over 40% of your income for your mortgage is just plan stupid. But people are doing all of that and more. I don't blame the lenders on this one. It's the uneducated consumers. If you don't understand what you're signing up for, you probably shouldn't sign up.

I'm going to add a huge "it depends" to all of your points.

ARMS? Some are OK, but it depends on a few things. If you have enough equity and can easily afford the higher payment when the rate adjusts, go for it. But for most people, you're correct.

Zero down? Again, depends. If you do zero down so as to keep cash for other purposes, and the payment is easily affordable (<20% of your income or so,) why not? Buying a house with zero down because you HAVE nothing to put down, that's risky. But doing it for other purposes, can be just fine. Perhaps adding a caveat that you must have cash reserves of a certain amount for a zero-down loan makes sense.

The over 40% thing? In some markets, that's what a starter home is! In places where average incomes are 50 grand and the average house is 400k, what other choice is there? Of course your points do illustrate one reason the prices are so high to begin with.

[brownsfan]

"I'm going to add a huge "it depends" to all of your points."

Yeah, but from the tone of your reply, sounds like you would follow my points for your personal finances? I'd also guess that these points are valid for easily 80% of mortgage applicants.

We are sort of insulated here in Akron. The housing market is flat, but since our homes aren't that expensive, they can't drop much. It's hard to drop the price of a home below the cost of building the same structure in place. :)