Q: My daughter and son-in-law want to buy a house here but don't have much money for a down payment.

I'm retired on a small pension and can't really help them. I've been reading lately about "no money down" loans and "interest only" loans and those scare me. I think it will really get young people in trouble to go so deep in debt. I read that some economist in Washington said that those who buy with no money down could lose money if prices decline. What do you think?

A: There is not likely to be a "bubble" effect on real estate prices here. Real estate prices are cooling in the center of the country, as they always do after a runaway market, and prices are predicted to fluctuate everywhere in the country this year as the market tries to stabilize. We, on Vashon, are not a part of that process since we are a "boutique" market with constantly high demand and perpetually low inventory. The Seattle real estate market has always been very volatile but it has not effected our prices much at all.

I've also read dire predictions of buying with a low or no money down programs. What many are forgetting is that we've had such programs for over 50 years! The FHA and VA home loans have always been low or no down payment, and have been used to get people into homes for generations. These days, all lending institutions can compete or even do better that these government sponsored programs, so they are no longer the only source of low down payment offerings.

I do advise against the "interest only" loans. Even though the value of property will continue to go up here, therefore increasing the equity in the home, it seems to be counterproductive to think that you'll have the same mortgage you started with even after 20 years of payments.

Remember that to build financial security one needs to start by owning their own home, so I encourage you to support your daughter and son-in-law in their plans to buy.