the most common leveraged purchase

[W. Kiernan]

Jeffrey Levin wrote:
>
> Greg Nowell wrote:
> >
> > ...If you put $3k down on a $100k house which you sell at $90k,
> > you'll have to cough up an additional $7k to get out of the
> > house--the equivalent of a 200% margin call...
> 
> ...These 3% loans work best for moderate to middle income households
> with adequate incomes but inadequate savings.  They don't do nearly
> as much for low income folks for whom homeownership is clearly out of
> reach...

There's something wrong with the idea of the average house owner
thinking of his house as an investment, leveraged or no.  This is a
mistake I see repeatedly; comparing a working-class house owner to a
rich fellow idly gambling with investments.

Primarily, a house is not an investment!  Not in any social class I've
ever belonged to, anyway; I can't speak for the folks on the hill.  A
house is something to live in; you have to live somewhere.  The
alternative to a low down payment house for low income folks is to
rent.  When you rent, of course, your payments just go up in smoke. 
Certainly I'd rather buy a house with a slightly higher-than-usual
effective interest rate than rent a house.

Yours WDK - WKiernan at concentric.net