Equity Sharing?
Question: I would avoid them. If you can’t even save up enough money to make the down payment, how on earth are you going to make the mortgage payments, AND pay for upkeep, AND pay for all the nice things you’d like to buy to put in your new home, AND pay off that initial down- payment loan? Topher Eliot One of the problems seen in the market is this: The houses are climbing at a rate that exceeds the amount one could save in a year. For instance, assume a house costs $200,000 (a fair lower estimate in LA). If you take 2 years to save up the $30,000 for a 15% downpayment, the house could easily now be selling for $300,000. What do you do? And all the while, you’ve been pissing away rent money that approaches a mortgage payment anyway (~1200/month), without any equity. It seems like something must be done, and if moving to a cheaper market is not an option, then what?
Answer: Well, you can do what people here did: stretch yourself to the limit, and/or take out a variable-rate mortgage, and then when the housing market slumps, either declare bankruptcy or allow yourself to be fore- closed on. I wish I could add a 
, but that’s what’s been happening, and our real estate market (Austin, TX) hasn’t been anywhere near as volatile as some places.
This approach has the advantage of protecting you from having to deal with high real estate prices for the next seven years, i.e. until your bad credit rating is wiped clean and people will lend you money again.
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