dryfly@MNGophers29 wrote:
As for the 20% down mentality, while I understand where DX is coming from, I wholeheartedly DISAGREE with that. Its all about debt to income ratio
^THIS… the ability to service fixed cost obligations of which a mortgage is most people’s largest obligation trumps all else. That 20% down everyone talks about is a cushion for the bank in case they need to foreclose and resell – covers a lot of their expected costs. Plus people are a lot less likely to ‘mail in the keys’ [lenders call this ‘jingle mail’] when times are difficult if people have some skin in the game [20% is a psychological threshold it seems – below which walkaways are more likely]… but even if they scratch together 20% it really doesn’t mean they can afford the house. Just means the bank is more likely to let them take the chance they can or can’t.