If you are going to buy a home to live in for awhile, you need to put itleast 20% or more down. 5% down, is just another max leverage scenario. You are going to pay more over time than the house is worth anyway, even on an after tax basis.
If you are concerned about rising rates, the way to address that is financing less principle. If you can only afford 5% down, then you cannot afford the house you are buying. If you cannot afford a 30 yr fixed with 20% down, and 30% of income towards the payment, do not buy a house now or ever. People have gotten away with this gambling in recent years, but the music is about to stop on this type of thing in my opinion.
Whatever selloff that is going to occur, is going to clear out the max leverage fools. I also do not believe that 50% will occur. If it were to occur on a national basis, that would wipe out 10 Trillion dollars of assets. It would create a wordwide depression unlike any that has ever occurred.
It is human nature to get caught in the hype at the very worst time, right before the markets turn. This is going to happen in commodities also. This happens in every economic cycle. As long as you approach this from a long term standpoint, with good ratios, you will not be subject to the clear out that is in process.
Buy a home to enjoy it and forget about becoming the next real estate mogul. My favorite quote of all time is from Larry Williams, “Leverage is for people that do not have any money.”
