Depending on whose figures you want to believe, somewhere between 60 and 70 percent of homes in this country are purchased subject to a mortgage. Mine was. And it wasn't a traditional 20-percent-down, 30-year fixed-rate scheme, either.
Okay, some of the tradition was honored: it was a 30-year fixed-rate scheme, and that rate was 6.25 percent, a tick or two higher than the lowest available at the time, but not at all horrendous. What's more, the package I wangled allowed me to borrow, not the usual 80 percent of the value of the property, but an astonishing to me, anyway 102 percent. This enabled me to cover the closing costs and associated expenses with less than $1000 out of pocket. Out of immediate pocket, anyway.
To qualify for this deal, I had to meet some fairly minimal income and debt requirements, and I was given a thick book on How To Understand Mortgages or some such business. The cardinal rule therein, of course, was "Don't get foreclosed." And by the time they were ready to write me a loan, I had figured more or less how much I thought I could afford, which was about halfway between what I had originally expected to be able to afford and the amount they said they were willing to lend. With this number in mind, I went house-shopping, and wound up with a house about five percent above my self-imposed ceiling price, and a monthly payment that didn't damage the budget too much.
Perhaps I have an advantage, in that when someone says "Do the math," I can generally, well, do the math. But I can't believe it's that much of an advantage: most people have spent at least as much time in school as I have, and have gone through much of the same coursework. Still, not everyone is doing the math, as Dan Melson writes:
When someone tells you that your payment on an $800,000 loan is $2573 per month (and there are many loans even worse than that out there), all it takes is the mathematical ability of a fourth grader, at most, to realize that even if it's interest only, you're only paying 3.8 percent interest and there just aren't any other loans out there anything like that, and maybe there's something going on that you don't understand.