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Our "starter home" 15 years ago was $50K. It was a two-bedroom, cute little brick craftsman-style house built in 1927 in a marginal neighborhood (which is now not a good place at all, unfortunately...we got out while the gettin' was good.)
We worked like crazy to make extra payments. We're on our 3rd house now, and each time we approximately doubled the purchase price. OTOH, we qualified for a LOT more than we actually borrowed, especially if we were willing to take one of those crazy speculative loans.
We always opted for the boring old conventional 30-year. The DH and I are not risk-takers, particularly. Take an ARM out on the off chance you might be earning more in 5, 10 years? Ha ha ha. Even if people do end up earning significantly more, chances are they are spending more too. Dumb.
Now, it really ticks me off to hear all the whining about "predatory lenders." Hey listen -- these were BANKS. Or mortgage brokers, who make money by selling a loan as a product. These are not noted for being nice, caring, altruistic people: Caveat Emptor.
Hey listen -- you buy a product, you make a mistake, it's YOUR fault. You should've done the research ahead of time and figured out what you were signing up for.
I could have bought a $500K house instead of my $200K house, but I thought it might have been nice to eat, too.
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