The prophets have counseled us to stay out of debt with the exception of (1) debt to pay for an education and (2) debt to purchase a modest home.
The four options in regards to the home decision are (1) renting, (2) buying, (3) building, and (4) renovating.
The Handbook for Families recommends that we should avoid spending more than 25 to 40 percent of our take-home pay for the total house payment, including insurance, taxes, and maintenance costs.
In regard to a home mortgage, points are 1 percent of the loan or one hundred basis points of the loan. For example, if the loan is for $200,000, then one point is equal to $2,000. Lenders charge points to recover costs associated with lending, and lenders retain the points.
