Quote:
Originally Posted by Crozbee
When I bought my condo I was approved for an amount that I would 100% not have been able to afford. It actually upset me since this was about 5 years after the housing crash due to this exact practice.
I distinctly remember a friend of mine telling me--circa 2004--that it was easier for him to buy a house than buy a car. Across the table another friend had just bought her place but couldn't get a car loan. Looking back I wish I'd given that some real thought at the time.
I'd bought my first place only a few years before and I was getting all kinds of offers for cash-outs and equity loans that I'm glad I decided not to take. It seemed like everyone I knew was doing it, and I was shocked at the skyrocketing sales prices of homes around me. I had all the anecdotal signs in the world that something was really wrong with the market but it was just luck that I avoided that mess. I strongly considered cashing out and buying a nice truck and remodeling, but I had a great car that refused to die and got too busy with my schedule to take on a reno.
One lesson learned: Houses are not always a smart investment and can't be counted on to appreciate over the period of your ownership. I grew up hearing the opposite (mostly from people who'd never owned a house).
Second lesson: Having a good down payment and 15-year mortgage may be a PITA, but it's something you'll be thankful for if you decide to sell the property in a shorter amount of time. I didn't need much down because it was a VA loan which seemed great then, and had a 30. But without any equity it was tough to do anything when I wanted to sell and the market was down.