There have been several interest rate reductions recently, and I don't think that we've seen the bottom of the mortgage hassles yet, so there could be more reductions in the cards. Especially since this is an election year and the gov't. folks will want to keep things running as smilingly as possible until Nov. Bubbamommie, How do you react to the idea of saving those ancillary costs and paying them upfront, if they turn out to be required, as adding them to the mortgage amount will mean that you go on paying on the increased amount for 15, 30 years? Are you finding it onerous to pay the current rate? My opinion is that it would be best to keep paying at that level, if possible, for reducing the monthly payment extends the time of paying by a substantial amount, especially since only a small amount annually in the early years goes to reduce the principal amount, as the current interest cost on that large debt is so high. Dave doesn't seem to agree, but quite a number of people feel that, so long as one has some cushion to tide one over emergencies, it's a good idea to make extra payments, as the contract allows, to pay down some on the principal annually, as far as one is able, for reducing that principal owing means that a smaller amount of the monthly payment must go to pay interest in each future year, resulting in the mortgage being paid off much earlier. I hope that you are pleased with your choice, throughout the life of the mortgage. ole joyful

"Suze Orman, financial expert, says that bills should be split according to income; if one makes 1000 a month and the other 500; then the 1000 a month should pay a larger portion." Wow, did Suze Orman really say that? I usually agree with her advice, but speaking as a person who usually earned WAY more than my roommates this sounds completely unfair! Why should I have paid more than my semi-employed roommates? Did I breathe more air or use more toilet paper? I don't think so. Sheesh.

Berniek is right: Much of the blame here falls upon the shoulders of the politicians (led by then-President Clinton), who forced banks to begin some rather foolish lending practices. Alan Greenspan certainly did his share to push this concept of "everyone can borrow" during his time as Fed chairman. Between creative financing, no money down offers, and other such options, the government has given people plenty of rope with which to hang themselves. We Americans haven't proven ourselves to be particularly strong in the moderation and self-discipline categories over the last 30-40 years. Also, remember the climate that existed in the 90s, when I bought my first house: Spurred on by the soaring housing prices, people were convinced that buying "as much house as you can afford" was a good move. Housing was considered an investment that couldn't fail. Yes, the experts began preaching about "the housing bubble" long before it hit, but the masses couldn't grasp how this sure-thing could ever fall. And there's always been a (faulty) basic belief that "If I couldn't afford it, the bank wouldn't lend it to me." I fully agree with those who say that Real Estate agents will push buyers to their upper limits and beyond, and banks will lend what they can -- it's all about profits for them. Yet, the home owner DOES also bear the brunt of personal responsibility. After all, who cares most about whether I can afford my mortgage -- and still buy groceries and other things I need? Clearly, it's ME! I reap the rewards or punishments of my decisions, so I should do the math and know whether I can comfortably afford a house (or anything else) before I buy it. However, we've sort of left that thinking behind in today's buy-now-pay-later society. We're constantly told that "we deserve" this or that thing. That if we're going to finance it, we deserve to have exactly what we want. That "everyone" has debt. We've got to get past that.

"but I would repay with after-tax dollars, and again pay taxes on that money when I eventually withdraw it." If instead of borrowing from your 401k you took out a bank loan, you'd still be paying it with after tax dollars, wouldn't you? The money you left in the 401k would hopefully grow in value. When you eventually withdraw it, you're still going to have to pay taxes on the money it made you, aren't you? But don't forget, you 401K money isn't guaranteed to make a profit. It might go down in value, maybe even drastically, as in 2000. If you had loaned yourself 50K in early 2000 and repayed it to yourself over five years at a reasonable interest rate, you'd be way ahead of where you would have been if you instead had left the 50K in the 401K, only to watch it to dwindling away, all the time makinge payments to the bank and letting them profit on the interest. The stock market's been doing well lately, so borrowing from the 401K isn't such an attractive option right now. But to rule it out automatically no matter what the current financial environment might because of pat statemnts like "you put it in with pretax dollars and have to pay it back with after-tax dollars" isn't making an informed decision. People should compare the various ways of borrowing money and see where they come out best.