Upside Down Home Equity
As a follow on to the following post, here is some good advice for those who can only buy a house with 5 to 10% or so down.
With no one quite sure when real estate prices will stop sliding, young homebuyers who can put down only between 5 percent and 10 percent of the price of their homes may see what little equity they have eroded by their homes’ falling values. This can leave them “upside down,” or owing more on their mortgages than their homes are worth. (Boston Globe)
I think people are more cautious in today’s market anyway but certainly make sure that you are getting a good deal. And while no one can the predict the future yet, I think you should buy if you know you will be settling in for the long run. History has proven that real estate will tend to go up in value. Try not to think short term too much - that is how most of this housing bubble started in the first place.