[Rathji]

I decided in April I needed more room than I had where I was renting. We looked at rentals around the city and the price range/quality of homes that were available made it ~20% more expensive to purchase a year old starter home. I can afford this mortgage with my wife working part time and me being a student and working only during the summer.

If something happened and my house dropped 100k in 'value' in the course of a year, what would it change?

I would be paying a little more (~40% in the 100k loss situation) in housing expenses than I could be if I was renting, but I would still be able to afford my house. If it dropped in half or by 75%, I would still be able to afford my mortgage payments.

At what point does it become a situation where you cannot afford to pay your mortgage? Are there really that many people stupid enough that they buy a house they cannot possibly afford the mortgage on their home? Enough people that it kills an entire nations economy? I can understand if people get laid off they can't afford a mortgage, but I am assuming that this is not the case since people keep screaming about subprime mortgage crisis and not the unemployment crisis.

I must be so naive that I just can't see what the problem is, can someone enlighten me?