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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (17075)	3/20/2002 11:08:06 AM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 74559

<<Countries with external debts, don't pay it. They just rolltover.>> Until they can't, witness Argentina.

To: elmatador who wrote (17075)	3/20/2002 11:26:06 AM
From: GraceZ	Read Replies (2) \| Respond to of 74559

But more importantly the debt is secured against an appreciating asset, their homes and part of the cost of the interest is picked up by Uncle Sam. As long as that asset is appreciating at a higher rate than the cost of the money they are justified in leveraging it. I went for a home within my means in an area where home prices were reasonable. I also went for a 20 year mortgage with a fairly large down payment because I'm not comfortable with large amounts of debt. I have friends whom I advised against buying their houses in areas I considered over-priced, who went with 30 year mortgages and low down payments (even one who went with an interest only 5 year balloon mortgage). Guess what? The ones who leveraged up the whazoo so they could buy the maximum house with the least amount of cash have had far bigger increases in their equity than I did over the last ten years and by a large margin. As long as the strategy works people will use it. Maybe in a couple more years when my house is paid off I'll look smart, but right now my conservatism isn't beating their foolishness.