You know, when we bought this house 5 years ago, everyone assured us we were making a horrible mistake.
The bank, the realtor, even our parents all thought we should stretch, buy the biggest house we could afford, and trust that income/home values would go up enough that the stretch would only be a stretch for a few years.
Instead, we sat down, figured out what we could afford on our then-salary, and bought a small started home on a 5% down 30-year fixed mortgage.
Well, our income did go up, but so did our expenses. But our house, even with mortgage, taxes, insurance and PMI is still super affordable and cheaper than renting would have been.
The starter homes in town have actually appreciated. We're walking distance from everything in a time of high gas prices too. I've been looking at similar homes selling around here. When we move, we'll make a profit. We'll be able to have a better down payment on our next home.
The moral of the story? Remember the OLD, pre-bubble advice? The stuff about not buying more house than you could afford, getting 30 year mortgages and staying for at least 5 years? Well, it turns out that it's still good advice.
And if the economy fails and we can't move for a few more years? Well, we'll be cramped, but we'll survive.
I do think I'd better drastically improve my sewing and mending skills though, just in case...