Should I Buy My Dream Home Now?

Should I Buy My Dream Home Now?

Now we come to your question of a long term low interest mortgage on a larger home in today’s current economic climate.  Dad once said (he was quoting someone and the name eludes me) that there are two ways to deal with the bank.  The first is to owe them nothing the second is to owe them 110% of all you own – anywhere in the middle is a dangerous place.  Keep in mind that Dad was a banker in the late 1960’s.  In other words if you owe them 110% of your loan they will work with you and extend you terms and do everything possible to avoid foreclosing on you because they will suffer a loss.  If on the other hand you borrow 50% from the bank and put up 50% of your funds you are in a perilous condition.  If your investment suffers a 40% loss and you cannot pay they will swoop down, foreclose and sell your property at a discount where they will recover all their capital and you will loose all of your capital.  Just keep this in mind.