Are you an advocate for a 100% loan to purchase a home?
I'm sorry, not me. I've done that and I would never do it again. Back in the days when I was hyped out about using other people's money (OPM), I felt that having my money in my own pocket is much better than in yours. So, we got a 100% loan while we just have the money sitting in the bank. Looking back, that was not a very good idea simply because we ended up using the money to furnish number of things in the house and these are things we can live without. Looking at the interest that we make on the entire life of the note simply makes my head spin. So, eventually, we paid the 2nd loan off after servicing several thousand dollars in interest. How wasteful!
While some smart financial advisor may advise us to "invest" the money, since I'm only paying a 6% interest and when I make a 12% gain in the stock market, I would still gain 6%. After taxes, maybe a 3.5 - 4% profit. Not bad. But this whole equation sits on a "what-if" scenerio that I would pick the right stocks to purchase. I'm never that lucky so, thinking back, starting off in the right foot probably will get me started in paying off my home sooner (several thousand dollars at least).
So in my case, I had the money but just did not choose to use it wisely in the first place.
However, the truth out there is that there are many more who has not much savings to speak off, should they be purchasing?
In the past, my answer would be a strong NO. Today, my answer would be a MAYBE. Why? Find out more soon.
