20% down fixed-rate loan with a local bank, probably 30-year for most [View All]

[alcibiades_mystery]

That's the tried and true method, and hard to argue with.

20% down: You walk in the door with equity. You can withstand a fairly substantial drop in market value without having to bring money to a sale, if necessary. The requirement also teaches you about savings in your pre-ownership days, usually in your 20's, or precisely when you're best suited to develop lifelong economic habits. You learn the value of a dollar, and affordability. And you know how hard a slog it was to accumulate that 20%. It means something. It has meaning over and above its quantity.

Fixed-rate: You can budget. Various interest and principle schedules can be explained to a sixth-grader of average intellect. You have predictability.

Local bank: The institution holds your loan. It has an abiding stake in the community. The people know you and your property.

This system worked well for 40 years. It even worked well for people forced to buy in at exorbitant interest rates in the late 70's and early 80's. I've had various finance students pitch me rationales for all kinds of ARMs and other gimmicks: who they work for, formulas out the whazoo, sigmas, charts, mumbo jumbo. I've understood them all, and never found a one convincing.

20% down payment. Fixed-rate. Simpler is usually better.