That $20K balloon payment is a little scary, although if it's 30 or 40 years in the future maybe I could have some time to save that up. Of course, there are other costs of ownership... homeowner's insurance... I wouldn't have the cash for a 20 percent down payment so I'd probably be saddled with mortgage insurance... if it's a condo, I'd also have to pay association fees, plus water, sewer and garbage aren't paid for like they are here (or are supposed to be, anyway).
Avoid baloon payments like the plague.
Before you sign a mortgage, you better be damn well skippy you're signing on something you either A) intend to live in for that many years, or B) you can turn a profit on.
The ex wife, aka The Beast, and I bought our first house on an ARM. It was a steal for the market at the time, and we planned to be in it no longer than 5 years (turned out to be three) anyway, so we were able to avoid the attendant evils that accompany ARMs. Bought it, brand new mind you, wasn't even built yet, for $67,500. When we decided to move back to the proper end of the state, I wanted to list it for $83,900. The realtor listed it for $78,500. It sold before the sign was up in the yard.
When we bought the house that burned, we refused to go ARM because we had no plans of ever buying another house. THAT got changed...but we kept the property. We're still on fixed rate, no baloon. The payment went up, but we figure it like this. We paid around 75K for house and property. Given what land sells for within 5 miles of here, we got 50K of land and 25K of house. Now we have 50K of land (and rising all the time) and 65K of house. And we're paying for about 90K total. God does provide.
One more tidbit from your elder. Don't rationalize yourself into thinking you can save for the baloon payment. I'd say less than 2% do. You still got life to live beyond a house payment. Kids maybe, cars, having a bit of fun from time to time, you'll age, you'll get sick, you'll have more stuff happen to you than you could fathom. All of it takes money. What'll be the first source you'll draw from? That baloon that isn't even due for another 34 years of course. Then you wake up needing 20K in three years.
Ain't trying to talk you into or out of a thing. Just giving you something to ponder.
