I purchased/mortgaged my house in 2000 and refinanced in 2003. I also went above the 25% rule. But I made sure I could afford it. The only time that I have been late was when my company changed how we were paid and I was short for a month.

My house's value is back to what I paid for it. But I was prudent enough to refuse to pay the insane prices of the bubble. I am so glad that I didn't.

Israelis are astounded when I tell them the 25 percent rule - housing expenses are a huge chunk of income here, and the housing market is always tight in this young, growing country. (Grand)Parents start saving almost immediately to help their kids buy apartments. Even so, mortgages are usually for 80-90 percent of the cost of the home, and typically 30-50 percent of monthly take-home pay (in a 2-paycheck economy).

Even with the remnants of centrally-planned socialist bureaucracy, we never had anything like Fannie or Freddie - despite the waves of immigration that Israel has absorbed.

It's not the specific structure of the mortgages that were/are the issue, it's the classes of borrowers that were made eligible for highly leveraged mortgages. Fannie and Freddie artificially upgraded huge swaths of mortgage debt by reducing eligibility requirements and packaging junk mortgages in highly rated portfolios. This shift propagated through the mortgage lenders and ratings agencies, multiplying the effect. Which is how we ended up with such a huge systemic problem. The whole market was mispricing the risk on these instruments. The reason that the market didn't clear these assets, as you'd expect in a bubble, is that none of these ass hats actually knew what they should be worth.

Our mortgage is our only debt and it is at very slightly over the 25% rule (piti vs income). We have no credit card debt and pay cash for vehicles and such. It would be pretty tough to do if we carried more debt. Of course, I have a 17 year old son that is driving so we pay a freaking fortune in car insurance right now. We've been in one place long enough that what we owe on the mortgage is significantly less than the equity. Even when the market belly-flopped.

Notice how very careful the pols are to not mention the biggest federal driver and subsidy for homeownership--the home mortgage interest tax deduction.

I have been all but forced to acquire property, due to the tax code. To top it off, now I have to continue to support mortgage interest tax deductions, as someday i will want to sell said property.

We squeeked by getting our mortgage approved and it's well above 30%-I mean to the counting pennies stage-and have never in 6 years of home ownership been late. I can't fathom it. Of course, we did that to be near a great school, which is no longer so great, and we're looking at other options so we may sell. We got a good enough deal that even now we don't owe more than it's worth and we put 0% down on a VA loan.

The problem with the no credit = bad thing is it punishes people who save up for stuff.

In the wake of the real estate crash, there are now a slew of articles touting the advantages of renting over owning. We own a co-op, but that was after running the numbers and realizing our rent was going to be increasing ever year. So for us, buying was financially a good move. It helped that we were willing to look at smaller apartments. Our owned apartment isn't as big as our rental was, but it works for us. It forced us to get rid of stuff that was just taking up space. Plus we know that if one of us loses his job, we can still manage the mortgage. Whether you rent or own, it always comes back to living within your means. It's not always easy, but you'll sleep better in the long run.

"The problem with the no credit = bad thing is it punishes people who save up for stuff."

In truth, the credit-reporting system in the USA is very broken. Consider what is really happening: a company you pay money to is sending this information to the credit bureaus. You have no relationship with the credit bureaus, no contract, nothing. Nonetheless, they collect your financial information and sell it to anyone who wants it. This would violate a gazillion privacy laws in just about any other western country!

That said, it's the system you've got, so you have to play the game. Get a couple of credit cards, charge a couple of bucks each month, and pay the bills at the end of the month. Stupid, but it makes nice little tracks on your credit report.

Hmmm...buying homes that are within one's means? Radical idea, you're dangerous.

The problem with mortgages, is it just drives all the prices up as more money becomes available, and then everyone has to get one, and then since everyone is getting one, the people on the bottom can't get mortgages as big as everyone else's, so they are stuck not being able to buy again, and now you've got the same situation as before only everything is more expensive.

One thing that's not often discussed is that home-ownership, in and of itself, is not ipso facto a Good Thing. Back when the bottom dropped out of the economy here in Iowa, during the late '70s and the 1980s, I knew lots of people who were shackled in place by the houses they'd bought...they couldn't sell them for anything like what they had in them, and couldn't just walk away and eat the loss. If they'd been renting, they could have looked around in areas that weren't as badly affected for work, and when/if they found a new job, told the landlord they'd be moving at the end of the month or whenever.