I’ve owned 3 houses over the years. Never refinanced or took out a second mortgage. I looked at a house as a place to live not an investment. I don’t understand the mentality to tell the truth.
I did finance all three though. From what I understand I would probably have a hard time coming up with the down payment and jumping thorough all the hoops to qualify. Thanks Washington!
Many people made a lot of money on smaller houses they bought to live in. Then they figured that if they could make $100k (after a number of years) on a $150k home, why not scrimp to buy a $300k home and make $200k? They thought that what had happened would continue to happen.....
I refinanced my previous house 2 times. But in each case, it was to get more favorable terms -- that was a period that interest rates were dropping gradually. I didn't take any money out and spend it on something else.
I eventually paid off the mortgage altogether. Since there was so much money locked up in it, I opened an equity line of credit, but only used it once to finance a the last 25% of a car -- the interest terms were much better. I didn't want to liquidate any more investments, as it would have cost too much in taxes.
I recently bought a new house and have a mortgage, even though it wasn't really needed. With finance rates below 3% at the time, it's practically free money. And with a 15-year term, it won't take very long to pay it off.
Qualifying for a mortgage wasn't hard at all. If you have a record of paying your bills on time, aren't already servicing a lot of credit (I pay off credit cards every month, and have no car loan), and buy something you can afford, the mortgage companies will fall all over you -- they want quality customers.
As the author says, buying a bigger house (or in a more desirable location) means you have to make sacrifices elsewhere. But, if you are realistic about your budget, and don't live paycheck-to-paycheck, it's much better than renting.