Believe it or not, lenders don't always want to get you in to the most house possible. If we let you get in over your head, we end up owning the house (after foreclosure) and mortgage companies aren't in the business of owning homes.
Our rule of thumb is to not allow your house payment to be more than 30% of your gross monthly income. Most people think we're crazy and wouldn't even let it be that high, but others will often push the envelope. This article by CNNMoney talks about the fact that house payments have grown recently in comparison to rises in income.
Sometimes an even more important number is what we call your "back ratio" -- this is your total monthly debt (new house payment + car + credit cards, etc) divided by your gross monthly income. The rule of thumb here is usually 41-45%, but there are programs that let it go up to 50% or so. In my eyes, that's when we all can get into trouble and we start to sacrifice our long-term financial goals.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment